American Apparel (APP) Sues Founder Dov Charney Over “Scorched Earth Campaign”

American Apparel
American Apparel

American Apparel has filed a suit against founder and ex-CEO Dov Charney on Monday, claiming he has launched a “scorched earth campaign” to try and regain control of the firm despite an agreement regarding his departure. Charney was removed as the CEO of American Apparel in December for allegedly misusing company funds as well as inappropriate conduct.

Officials with the company filed suit against Charney in a Delaware Chancery Court, claiming he was “wrongfully interfering with American Apparel’s operations and sabotaging its relationships with vendors and lenders.” The suit also claims Charney is still “engaged in an ongoing subversion of the company’s rebuilding efforts”, a violation of the agreement he made when he resigned.

Charney’s attorney had not returned a call from Bloomberg requesting a comment on American Apparel’s suit before publication.

This fund run by a SAC Capital alum bought restaurant stocks amid the pandemic

restaurantPrentice Capital Management was up 6.6% for the first four months of the year, compared to the S&P 500's 9.3% decline and the Russell 2000's 21.1% decline. The HFRX Equity Hedge Index was down 9.4% for the quarter. Q1 2020 hedge fund letters, conferences and more Gross and net exposures In his first-quarter letter to Read More

The case filed at the Delaware Chancery Court (Wilmington) is American Apparel Inc. v. Dov Charney, CA No. 11033.

Ongoing American Apparel – Dov Charney battle

Today’s lawsuit is just the latest twist in a bizarre saga that began this summer when American Apparel’s BoD suspended the mercurial Charney for misconduct. The board eventually fired him, but Charney has been working to return to the firm he founded ever since. Of note, Charney filed a lawsuit against  American Apparel and major investor Standard General a couple of weeks ago for defamation relating to his ouster.

The ongoing legal free for all also includes shareholder suits from former employees claiming the board committed proxy fraud when it ousted Chary, and that he was fired for not cooperating with plans to sell the company. The retailer has called the allegations in that case “completely baseless.”

The lawsuit unveiled Monday claims that Charney has trespassed on company property, interfered with several of American Apparel’s conference calls, tried to have employees carry out his orders, tried to get access to the firm’s sales reports and even threatened employees who would not support his return to the retailer.