American Apparel founder Dov Charney is not known for earning good press. Along with allegations of sexual misconduct involving employees and multiple bankruptcies of his company, Charney had been suspended from his role of CEO of American Apparel for reasons of policy violations and misuse of funds before American Apparel’s last bankruptcy resulted in the sale of the brand for 88 million dollars to Gildan Activewear.
This week, the Delaware Supreme Court upheld a ruling that states Charney must repay 19.5 million dollars to Standard General, a New York hedge fund Charney had used as backing to fight for control of American Apparel at one point. In the court’s decision upholds a ruling from December of last year that determined the verbal agreements between Charney and Standard General do not overrule written agreement that the two parties had signed. The verbal agreement stated that Charney could hand over additional American Apparel shares purchased with his loan back to Standard General.
“I don’t have any funds. There is nothing to get from me,” Charney said to Apparel News.
Charney has founded a new brand called Los Angeles Apparel, which is seemingly quite similar to American Apparel, manufacturing mostly T-shirts and sweatshirts. Most of his 400 employees are former staff from American Apparel earning minimum wage. Charney explained to Apparel News that the company is controlled by a trust which is controlled and funded by investors, and his only weight in the company is CEO services.