BUSINESS OF FASHION: APPARENTLY AMERICAN APPAREL IS AS TRANSPARENT AS SPANDEX LEGGINGS
American Apparel’s executive drama continues with a recent complaint from a major investor that the board withheld important information regarding its management shakeup.
According to a Bloomberg report, Bigger Capital Fund is American Apparel’s sixth largest shareholder with about two million shares, and claims that there has been “systematic failure to provide full disclosure of material information” surrounding the sudden ouster of ex-CEO Dov Charney. Leveraging corporate law in Delaware, where American Apparel’s corporate body is based, the investor requested documents from the retailer, primarily objecting to the board’s failure to notify investors of its plan to replace Charney before voting on June 18 of this year.
Bigger Capital Fund’s request detailed strong concerns over management turmoil within the company and the effect the issues have had on company performance:
“As things currently stand, American Apparel is continuing to sustain massive losses and erosion of shareholder value persists. The Company has massively underperformed peers on a profitability basis for years… It is imperative that the Board must conduct itself in accordance with the highest governance standards, representing fairly and vigorously the interests of all shareholders, providing transparency and full disclosure of all material events and addressing the concerns of all its shareholders.”
American Apparel has also been approached by Manhattan-based private-equity firm Irving Place Capital with a takeover bid, allegedly with plans to re-engage Charney again at the retailer.
Accused of egregiously violating company sexual harassment policies and misusing corporate funds, Charney has been replaced by incoming CEO Paula Schneider, though Charney’s defense called the charges “baseless.”
It remains to be seen if American Apparel’s board will remain as sustainable as the brand itself.
Image via Shutterstock/Thumbnail via Keith Bedford, Bloomberg