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American Apparel fires founder Dov Charney American Apparel fires founder Dov Charney
(about 1 hour later)
The clothing and accessories retailer American The clothing and accessories retailer American
Apparel Inc has ousted its controversial founder Dov Charney as chairman and moved to fire him as chief executive and president Apparel Inc has ousted its controversial founder Dov Charney as chairman and moved to fire him as chief executive and president
amid an ongoing investigation into alleged misconduct.amid an ongoing investigation into alleged misconduct.
Charney, who has been repeatedly targeted in sexual harassment Charney, who has been repeatedly cited in sexual harassment
lawsuits, would be terminated for cause after a contractual 30-day cure lawsuits, would be terminated for cause after a contractual 30-day cure
period, the Los Angeles-based company said in a statement late on period, the Los Angeles-based company said in a statement late on
Wednesday.Wednesday.
The company, known for its racy advertising and bright The company, known for its racy advertising and bright
"Made-In-America" clothes, said its chief financial officer, John Luttrell, would act as interim "Made-In-America" clothes, said its chief financial officer, John Luttrell, would act as interim
chief executive during the search for a permanent chief executive during the search for a permanent
CEO. The retailer also appointed Allan Mayer and David Danziger as CEO. The retailer also appointed Allan Mayer and David Danziger as
co-chairmen.co-chairmen.
"We take no joy in this but the board felt it was the right thing to do," Mayer said in a statement."We take no joy in this but the board felt it was the right thing to do," Mayer said in a statement.
Charney, 45, founded American Apparel's predecessor companies inCharney, 45, founded American Apparel's predecessor companies in
1989 and has been in charge since 2007 when the company went public. 1989 and has been in charge since 2007 when the company went public.
American Apparel spokesman Terry Fahn declined to provide additionalAmerican Apparel spokesman Terry Fahn declined to provide additional
details. Charney did not immediately respond to calls and emails details. Charney did not immediately respond to calls and emails
seeking comment.seeking comment.
The company, which is struggling with weak sales and heavy debt, The company, which is struggling with weak sales and heavy debt,
said the management changes may have triggered a default under its said the management changes may have triggered a default under its
credit agreements, adding that it would be in discussions with its credit agreements, adding that it would be in discussions with its
lenders for a waiver of the default.lenders for a waiver of the default.
In February the company engaged restructuring advisers after it In February the company engaged restructuring advisers after it
had reached $240m in debt and reportedly came close to breaching loan had reached $240m in debt and reportedly came close to breaching loan
covenants – debt terms designed to protect its lenders.covenants – debt terms designed to protect its lenders.
The company's shares, which have lost more than two-thirds of their The company's shares, which have lost more than two-thirds of their
value over the past year, closed at 64 cents on the American Stock value over the past year, closed at 64 cents on the American Stock
Exchange on Wednesday.Exchange on Wednesday.