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THE BIZNOB – Global Business & Financial News – A Business Journal – Focus On Business Leaders, Technology – Enterpeneurship – Finance – Economy – Politics & LifestyleTHE BIZNOB – Global Business & Financial News – A Business Journal – Focus On Business Leaders, Technology – Enterpeneurship – Finance – Economy – Politics & Lifestyle

Finance

Finance

American Apparel Narrowly Escapes Bankruptcy with Shareholder Deal

via flickr/SimonQ錫濛譙 via flickr/SimonQ錫濛譙
via flickr/SimonQ錫濛譙 via flickr/SimonQ錫濛譙

American Apparel Inc. is holding on for dear life. It has just made a deal with shareholder Standard General that will financially save the company from spinning into bankruptcy. According to Los Angeles Times, the retailer has agreed to receive $25 million from the investment company in order to handle the monetary concerns and bring in a new management board.

The deal is set to eliminate founder Dov Charney and other members from their board positions, according to Mashable. The board of directors removed Charney from CEO in June after poor business judgment and lawsuits with female employees. Mashable reported that Charney might be fortunate enough to return to CEO, subsequent to an examination of his actions. Until then, however, he will remain as a “strategic consultant.”

 

Read also: American Apparel CEO Dov Charney Canned for Sexual Assault — Company Struggles with Debt

 

Hence, American Apparel is putting full trust in Standard General—especially after it lost $270 million in its last three fiscal years, according to The New York Times.

“This truly marks the beginning of an important new chapter in the American Apparel story,” said Allan Mayer, a board co-chairman, according to The New York Times. “With the support of Standard General, we are confident the company will finally be able to realize its true potential.”

Standard General controls approximately 44 percent of American Apparel, and it has stressed that keeping American Apparel’s made-in-the-U.S. standard is of great concern. Loyalty to Charney, however, is not its first priority.

“The best way forward is to build a brand independent of the founder’s name,” said Anne Olderog, director of brand consulting firm Vivaldi Partners Group, according to The New York Times.

American Apparel is on its way to a big change, and it appears to be that this transformation will be a beneficial, two-way road.

 

 


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