It's not looking good for one of our favourite brands!
This morning, US brand American Apparel filed for Chapter 11 bankruptcy.
It's not the end of AA, but it is a notable point in the continued downward slide of the once edgy brand that has lost over €342m over the last five years.
According to the filing, the brand has converted nearly €200m worth of bonds its creditors held in the company into shares, giving those lenders full control of AA.
This move allows the brand to properly operate but it will only be able to ship 10 percent of its new A/W line to shops due to financial shortages.
In a happy note, both factory and retail workers will keep their jobs. And along with many optimistic statements this morning, AA's corporate leadership expressed their commitment to keeping its manufacturing in the US.
In terms of legacy, the filing and restructuring reduces questionable founder Dov Charney's once-considerable stake in the company to almost nothing. So, despite Dov's many attempts to regain control of the brand he established in 1989, it looks like he is now out for good.
American Apparel continues to have potential and while the company predicts six months for its restructuring to be complete, we hope it goes back to a store we love to shop in like before.
Last month, American Apparel attempted to remove CEO Dov Charney from the company because of sexual harassment claims. However, he isn’t going out easy as last week Charney moved to increase his stake in the company from 27% to 43%, meaning he will have the controlling stake in the company and will be able to influence the board of directors who were looking to have him removed.
Well played, Charney, well played.
A committee of independent directors are said to be appointed to oversee Charney’s case of ‘alleged misconduct’ to see if he can be formally reinstated into the company. He won’t be CEO, but he’ll still hold a lot of power.
Is this more proof that you can do what you like as long as you have enough money to make up for it?
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Niamh Geaney reports.
The founder and CEO of American Apparel, Dov Charney, has been fired by the company’s board of directors after spending years fighting sexual harassment allegations.
The company released a press statement saying that they had decided to: “terminate his employment as president and CEO for cause.”
Don first founded American Apparel as T-shirt business back in 1991.
The company soon grew a huge fan base both in America and abroad.
However, since its formation Dov has faced constant sexual harassment claims from his female employees, which he usually managed to dismiss or settle.
But it seems the company could no longer ignore the sexual harassment surrounding Don and made the decision to oust him on Thursday.
“We take no joy in this, but the Board felt it was the right thing to do. Dov Charney created American Apparel, but the Company has grown much larger than any one individual and we are confident that its greatest days are still ahead.”
Board members, Allan Mayer and David Danziger, have been appointed as co-chairmen of the company, while the future of American Apparel has still yet to be decided.