It’s official: Dov Charney is looking to shake up the board at American Apparel.
The LA clothing brand’s controversial founder — and biggest investor, with a 27 percent stake — has been contacted by “supporters,” including other shareholders, since the company’s board moved to oust him June 18, Charney revealed in a securities filing.
Charney said his allies include American Apparel shareholders “who expressed support for his continued leadership” after the company’s board, in a surprise maneuver, suspended him as CEO and stripped him of his chairman role at a meeting last Wednesday.
As first reported by The Post last week, the 45-year-old exec is looking to regain control of the board by assembling a pro-Charney shareholder majority — and then overturning the previous vote.
The strategy could include using a majority bloc to demand the addition of new directors who would support the ousted founder, sources said.
The board last week accused Charney in a termination letter of “willful misconduct,” including arranging severance agreements with former employees who had claimed sex harassment, and allowing an employee to post a blog with nude photos of Irene Morales, a former employee who had accused him of making her his “sex slave.”
Sources said Charney’s lawyers are mounting a defense, charging the legal counsel and some directors had been party to the situations in question.
“If the board signed off on what it’s saying he did, it’s going to be much harder for them to prove it’s willful misconduct,” said Jason Knott, an employment litigator at Zuckerman Spaeder.
American Apparel refused a demand on Monday to meet with Charney’s lawyers, who now are preparing for a legal attack, a source said. They may elect to pursue the case in arbitration, which could keep details out of the public eye, the source added.
Charney suffered a setback in his battle against the board Monday as FiveT Capital, a Swiss investment firm that initially had indicated suppport, moved to sell its 13 percent stake in the company, sources said.
The 13-D filing on Monday with the Securities and Exchange Commission by Charney technically makes him an activist shareholder in the company he founded.
Charney plans to engage with the clothing retailer’s board, management and other stockholders on “matters related to governance and board composition, management, operations, business, assets, capitalization, financial condition, strategic plans, and the future of [American Apparel],” he said in the filing.
Meanwhile, American Apparel confirmed Monday it has hired investment bank Peter J. Solomon as an adviser in the escalating crisis, saying it wants to ensure it has “adequate access to capital in the future at a reasonable cost.”