July 24, 2024

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Dov Charney Files for Bankruptcy as Standard General Payment Looms

The battle for American Apparel was decided long ago — in 2017, when Gildan Activewear Inc. bought the brand out of bankruptcy — but the fighting never ended for some of the combatants.

In the latest salvo, the brand’s founder Dov Charney filed for personal bankruptcy in Los Angeles on Thursday. And his former partner — hedge fund Standard General — followed him to the court as it continued to seek payment of some $30 million the courts have judged it’s owed.

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The fight goes back nearly eight years and is filled with claims of inappropriate behavior, the ouster of Charney as chief executive officer, high finance power plays and legal action galore.

The latest round of filings gave only a clipped hint in legalese at the nearly Shakespearean struggle that once gripped fashion and ultimately decided the fate of one of its most improbable companies — the outsized American Apparel, which put the live-out-loud Chaney and domestically made blank T-shirts on the map with an overtly sexualized approach to just about everything.

Charney’s Chapter 11 bankruptcy filing lists both assets and liabilities between $10 million and $50 million. Standard General is not mentioned, but the company and its claims loom large.

It all started in 2014, when American Apparel’s board surprised Charney at a meeting, ousting him as chairman and suspending him as CEO, alleging misconduct and pointing to repeated allegations of sexual harassment.

But Charney — who is known not just for his libertine lifestyle, but his resiliency amid an often self-imposed chaos — quickly inked a deal with Standard General, borrowing nearly $20 million to buy back shares of American Apparel.

The last-ditch effort failed and instead of taking back control of American Apparel, Charney was fired for cause, Standard General pressed forward without him and new management was installed with plans to change the company’s image.

The remake of American Apparel failed and led to a bankruptcy filing and the sale to Gilden.

That just left Standard General and Charney — who had gone from allies to enemies — to sift through their agreements.

Charney went on to form Los Angeles Apparel, a company he works at, but does not own. Along the way he was trailed by Standard General, which argued it was owed money. The courts ultimately agreed.

Now Charney is in bankruptcy court and Standard General, which has sought to wrap Los Angeles Apparel into the case, is seeking its money there.

Reached by WWD on Saturday, Charney declined to comment.

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