It looks like the ouster of American Apparel founder Dov Charney is under question. The 6th largest investor of America Apparel, Bigger Capital Fund, is questioning the amount of information that was given to investors before making the final decision to fire Charney.
According to Bigger Capital, in a letter from Bloomberg News, there was a “systematic failure to provide full disclosure of material information.” This may be a breach of fiduciary duties.
Bigger Capital has gone on to seek more information to look into the final decisions for Charney’s termination, which are based on violating the sexual harassment policy and misuse of corporate funds.
Meanwhile, Paula Schneider has been named as the new CEO. She will be receiving a base salary of $600,000 and potential incentive award of $300-$450,000.
Soon after the firing last week, there was immediate speculation that there was going to be a takeover bid. This week, people close to the matter have said that Irving Place Capital, a New York-based private equity firm, made an offer. According to Bloomberg News, it was at $1.30 to $1.40 per share. (At its peak, shares were worth $15 a share. Most of this year, it’s been at $.50 a share.) It also said that the takeover would include bringing Charney back in some role in the future.
As we have noted, American Apparel is a strong brand among youth culture markets and has been the leader in the blank, no-logo movement for years. It will be interesting to see if the latest changes have any effect on the marketplace moving forward.