Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Charney Rejected Ultimatum To Step Down

Published 06/21/2014, 11:44 PM
Updated 06/21/2014, 11:45 PM
Charney Rejected Ultimatum To Step Down

Charney Rejected Ultimatum To Step Down

By Marcy Kreiter - American Apparel (NYSE:APP) gave Dov Charney a choice: Step down as CEO and he could remain a consultant for the company in a creative role or face firing.

Charney, 45, refused to step down and so was fired Wednesday by the company he was founded. The situation came to a head after the board learned an employee planned to publish naked pictures of former company employee Irene Morales. Though Charney didn't publish the pictures, he didn't try to stop the publication either, the New York Times reported.

Morales sued Charney for $260 million in 2011, alleging she was forced to perform sexual acts. The case, however, was thrown out in 2012, Jezebel reported.

An internal investigation conducted by the Jones Day law firm found Charney had misused company resources.

Charney had been dogged by accusations of sexual harassment for years.

Charney was fired during a nine-hour board meeting, a source told the Times. His contract provides for immediate suspension and formal termination in 30 days. The board also voted to remove him as chairman though he still owns 27 percent of the company's stock, which has fallen from $15 a share in 2007 to $1 now.

Charney Saturday accused the board of acting illegally. A letter sent by his attorney demands his reinstatement and calls for a meeting no later than Monday, CNNMoney reported.

© Reuters. American Apparel founder Dov Charney was fired by the board for misusing company resources.

“By presenting Mr. Charney with this absurd and unreasonable demand, the company acted in a manner that was not merely unconscionable but illegal,” the letter said, also denying Charney's actions damaged the company's finances and reputation.

Co-chairman Allan Mayer confirmed the company had received the letter.

The company said Charney's dismissal could trigger a notice of default as negotiations continue with banks and private-equity firms.

Mayer told CNNMoney he thinks the firing ultimately will help the retailer.

"There are people who will tell you that Dov's reputation was a real drag on the company. There were people and firms unwilling to do business because Dov ran the company," Mayer said. "Since we announced the decision, we've been contacted by mainstream, top of the line, institutions that have not been interested in supporting us."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.