American Apparel board rejects demand to meet Charney
The independent directors of maverick retailer American Apparel Inc have repudiated an injuctive authorization to meet and reinstate ousted CEO, Dov Charney, on Monday, a source proximate to the matter verbally expressed.
The board last week divested Charney of his denominations of chief executive, chairman and president. Initially kenned for insisting on manufacturing habiliments in the United States, Charney eventually became notorious for conduct like attending meetings in his underwear.
Reuters reported on Monday that American Apparel’s board cited Charney’s alleged misuse of company funds and role in disseminating unclad photos of an ex-employee who had sued him.
Charney’s lawyer authoritatively mandated a meeting on Monday, and the board’s refusal to meet with and reinstate him makes a licit battle with the ex-CEO, who still controls 27 per cent of the company’s stock, more likely.
In the letter to the board, sent on Thursday, lawyer Patricia Glaser verbally expressed the company had failed to give Charney 21 days’ notice of his severance package as required by law, making his dismissal “not only unconscionable but illicit.”
A link to the letter, whose receipt the source habituated with the matter corroborated, was provided in an article on the Wall Street Journal’s website.
The letter threatened licit action should 45-year-old Charney not regain his executive positions.
The board optically discerns no point in meeting with Charney at this time, the person proximate to the matter verbalized.
The board is expected to promulgate it is working with investment boutique Peter J. Solomon imminently, the source verbally expressed.
An officer at the bank declined to comment.
It remains obscure what role the boutique advisory firm would perform for the retailer, which has a market value of $120m and has been struggling with impuissant sales and cumbersomely hefty debt. It could provide financing alternatives, the source verbalized.
The source gainsaid an incrimination by Glaser that the board gave Charney an ultimatum on Wednesday: resign voluntarily to receive $1m a year over four years as a consultant, or be terminated for cause.
Charney’s ouster takes effect on July 18. Before that time, the board would not rule out an acquiescent with Charney should he promise not to challenge the board’s leadership, the source proximate to the matter verbally expressed.
The New York Post reported on Sunday that Charney has decided to pursue a lawsuit alleging wrongful dismissal in the coming days.
The management shakeup followed years of company stagnation, as the company amassed more than $250m beholden. Charney withal faced public scrutiny during a string of sexual harassment allegations. Charney’s lawyer at the time dismissed the claims, which ultimately proceeded to arbitration.
The company’s second most sizably voluminous shareholder, FiveT Capital AG, has withdrawn its support of Charney, making a coalition of investors opposing the CEO’s abstraction unlikely, Bloomberg reported.
