Dov Charney is not letting American Apparel, the company he founded in 1998, go without a fight. Shortly after the company's board of directors decided to relieve Charney of his president and CEO roles (following a 30-day suspension period), Charney told the Financial Times that he would take legal action if not granted his job back. In that event, he plans to seek between $23 million and $25 million in severance pay for what he believes was a wrongful firing.
His latest tactic, however, which he began taking steps towards last week, is regaining control of the company by buying more shares of it. According to an SEC document filed Monday, Charney bought 27 million shares of American Apparel on June 27, upping his total stake from 27 percent up to 43 percent, meaning he only needs another seven percent to get his company back (and also that he's obsessed with the number 27?). But that seven percent will be pretty difficult, if not impossible, to come by.
Charney got those 27 million shares by entering a loan agreement with an investment firm called Standard General. Basically, Standard General bought the shares and will loan Charney the money to buy the shares from them. In response, American Apparel enacted a one-year shareholder rights plan (more familiarly known as a "poison pill") that prevents an investor or a group from buying a large stake in the company, and prevents shareholders who already have large stakes (like Charney) from substantially increasing their shares.
The same day he bought the shares, Charney also tried to schedule a shareholders' meeting for September, the purpose of which was to increase the number of directors on the board to 15. His request was denied on the basis that he did not have the authority to call the meeting.
Meanwhile, the company is continuing its investigation into Charney's alleged misconduct.
But Charney is not American Apparel's only cause for concern at the moment. One of the company's creditors, Lion Capital, is demanding repayment of a $10 million loan upon Charney's exit. American Apparel has told WWD that it is still in talks with Lion and will be able to access the funds to pay them if needed.