Dov Charney, Founder and Former American Apparel CEO, Files for Bankruptcy
Dov Charney has once again made his way into headlines. The former American Apparel founder and CEO has filed for personal bankruptcy in Los Angeles, along with his latest business venture, a vintage clothing store. According to the Business of Fashion website, Charney was forced into bankruptcy court because he owed $30 million to a New York-based investment firm, Standard General, involved with American Apparel.
In the 1990s, Charney built American Apparel into a major retailer based in Los Angeles. The company became publicly traded in 2007, but shortly after, Charney was forced out as the company began losing money. According to various reports at the time, the board ousted Charney in 2014 in light of his inappropriate behavior and constant sexual harassment accusations, among other things.
Charney made multiple attempts to take back the company but was never able to get the financial backing needed. In 2014, Charney secured a deal with Standard General and borrowed around $20 million for the shares buyback of American Apparel, according to a report on SK Pop. However, that path never panned out. The investment company moved ahead with the deal without him, and new management was hired. Ultimately, American Apparel filed the first of two bankruptcies in 2015, and the company was later sold to Gildan Activewear.
In 2017, a Delaware judge ordered Charney to repay the $20 million to Standard General. Most recently, the investment firm took Charney to court in order to obtain an unsettled payment of $30 million, which forced him into bankruptcy, according to the report on Business of Fashion. His latest clothing store venture, Arya’s Vintage Closet in Costa Mesa, California, has also filed for bankruptcy.
In his bankruptcy petition last Friday, Charney listed assets and debts of as much as $50 million each. While in bankruptcy, Charney will be able to halt any debt-collection efforts while he works out a plan to repay what he can. Charney plans to reorganize Arya’s Vintage Closet while under court protection and arrange a loan to finance the company’s expansion, Charney’s attorney, William N. Lobel, said.