American Apparel founder Dov Charney could start new clothing company

DOV Charney, the American Apparel founder who was ousted amid a storm of sexual allegations, could be about to do it all over again.

OUSTED American Apparel chief executive Dov Charney may start a new clothing company after being knocked back in his best chance to regain control of the now-bankrupt company he founded.

On Monday, a bankruptcy judge approved a reorganisation that hands the company over to its senior lenders, shutting out Mr Charney’s alternative $US320 million ($460 million) takeover proposal, Bloomberg reports.

Under the approved plan, a number of lenders including Alternative Capital LP will trade their debt for control of the clothing retailer, reducing its liabilities by $US200 million ($288 million).

The judge rejected Mr Charney’s claim that the company would fail without him.

The disgraced Mr Charney, who was forced out of the company last year amid a storm of sexual harassment allegations, has the backing of his financial supporters to now launch a direct competitor to American Apparel.

“We are backing Dov on a new venture,” Chad Hagan of Hagan Capital Group told Bloomberg. “We will keep an eye out on American Apparel and see what happens with the brand. Ideally, if we can pick it up down the road, we will.”

Mr Charney said the new management was leading his old company down a “road to ruin”. “Part of me can scarcely believe that a court could confirm their plan as feasible given the operating performance of the business under their management,” he said. “Stay tuned.”

American Apparel CEO Paula Schneider said: “This is a new day for the company, and a positive outcome for our customers, vendors and employees. With this milestone behind us, we are now fully focused on executing our turnaround strategy.”

American Apparel ad.

CHANEY: ‘LIKE A FILTHY PIG’

Mr Charney was ousted in December 2014 following a six-month suspension, prompting a flurry of lawsuits on both sides. After Mr Charney sued American Apparel for defamation, his former company released explosive details of his alleged dealings with staff.

In the court declaration, American Apparel board chair Colleen Brown alleged Mr Charney “repeatedly engaged in conduct that violated the Company’s sexual harassment and anti-discrimination policy” and “engaged in conduct that repeatedly put [himself] in a position to be sued by numerous former employees for claims that include harassment, discrimination and assault”.

Among the allegations include the discovery of “voluminous evidence of Mr Charney’s sexual liaisons with employees and models ... [including] explicit emails, text messages, video and still photographs”.

“He sent messages that included pornographic videos (or links thereto), pornographic photographs and other nude pictures,” Ms Brown said. “Additionally, he frequently engaged in inappropriate sexual banter, infantilising women and referring to himself as ‘Daddy’.”

Mr Charney allegedly sent employees text messages that included statements such as: “Your a** in that photo is the perfect c** target!!”; “Daddy is so excited to play with the most tiny blonde c** kitten in the whole school”; “Should I unload my c*** now??? Like a filthy pig?”.

American Apparel ad.

In her declaration, Ms Brown said one female sent an email to Mr Charney complaining about the work environment and “Mr Charney’s conduct in particular”.

Ms Brown writes: “In that email, the employee states, ‘First, don’t ever, ever hit or slap me in the face again. Don’t call me a s***, whore, slave or b****. Don’t call me stupid.’

“The employee also laments what she believes to be the perception of female employees at American Apparel: ‘[T]o be associated with American Apparel, especially as a woman, was once a bit of a status symbol — something to be proud of.

“People think we’re a bunch of empty ‘s****’ because a man we call our ‘Daddy’ [i.e., Mr Charney] has to c** all over our faces five times a day.’”

In a statement to Buzzfeed, which published the court documents in full, a lawyer for Mr Charney said “much of this information and allegations are completely false” and that the company was “desperately trying to distort public attention to the fact that Mr Charney’s firing was illegal”.

“They went through a well protected personal photo archive that no one had access to other than Mr Charney and looked though his private materials which span a period of over 30 years,” he said.

“They went through years and years of private text messages from his personal telephone between himself and his friends, some of which involved amorous conversations that were consensual and welcome in nature.”