American Apparel founder and former Chief Executive, Dov Charney, says he is exploring plans with potential and existing investors and industry executives to revive the company's bankrupt company - including a potential bid to buy the clothing retailer out of bankruptcy. Charney, who founded the teen apparel retailer in 1989, said on Friday that he has hired Cardinal Advisors LLC to advise him on the process.Charney was fired last December from his dual roles of CEO and chairman following alleged misconduct, including misusing company funds and failing to stop a subordinate from creating blog posts – including ones containing nude photos – that served to defame former employees. He has since been trying to regain control of the company.
The retailer, which had about 9,000 employees and 227 stores as of Sept. 30, was struggling with losses and debt under his leadership, and its results only worsened after his dismissal. That ultimately led the chain to file for bankruptcy protection in October. “Charney is confident that new and existing investors, working with him and his team of industry leaders, would be able to realize significant long-term value for American Apparel’s stakeholders,” according to the statement.
In a short interview, the former CEO said he’s been talking to several potential financial partners, but declined to be more specific. Cardinal Advisors, which was started in 2014, confirmed that it’s working with Charney. Co-founder David Felman is a veteran of investment bank Moelis & Co. “American Apparel appropriately evaluates all indications of interest in the company," Liz Cohen, a spokeswoman for the retailer, said in an e-mail. "It is premature to speculate on any such indications of interest."
The former CEO is running out of time to regain control of American Apparel. Creditors are scheduled to vote in the coming weeks on a company reorganization proposal that is backed by senior lenders. After that, U.S. Bankruptcy Judge Brendan Linehan Shannon will hold a hearing in January to make a final decision about whether to approve the company’s reorganization.
Charney will need to convince American Apparel’s current managers, or its bondholders, that he can offer more money to creditors than the current plan. If that fails, he could object to the plan during the January hearing, and he would need to show that he has committed financial backing in order to persuade the judge to choose his proposal over the company’s.