Monday ruling decides fate of Dov Charney deal for American Apparel
By Tom Hals
WILMINGTON, Del. (Reuters) - A U.S. judge will decide on Monday whether teen retailer American Apparel can exit bankruptcy under the control of hedge funds or if he will allow a takeover bid by investors working with its controversial former chief executive, Dov Charney.
Los Angeles-based American Apparel Inc, known for its "Made in the U.S.A." fashion and sexually charged advertising, wants approval for a bankruptcy-ending deal that would cede control to hedge fund bondholders, including Monarch Alternative Capital.
Charney has challenged that deal, and wants U.S. Bankruptcy Judge Brendan Shannon to reject the company plan and allow his partners to pursue their $300 million takeover. That bid is backed by two investment funds, Hagan Capital Group and Silver Creek Capital Partners, but was recently rejected by the company's board.
Shannon said after two days of testimony he would rule at 11 a.m. ET on Monday. The judge has to determine if the company plan, which was approved by the company's creditors, was fair and feasible.
The company blamed its October bankruptcy on a shift in shopping habits, too much debt and inventory and lawsuits tied to Charney's volatile tenure as CEO.
Charney testified for two hours in an attempt to show the company was wrongly refusing to consider his offer.
Charney seemed to relish the story of founding the company as a teenager and expanding it into a publicly traded corporation that employed thousands. He still seemed incredulous over his firing.
Charney, wearing a gray jacket and slacks and white sneakers, testified that the board "blackmailed" him in mid-2014 by offering a multi-million dollar severance if he surrendered his large minority stake and left. If not, he faced "character assassination." Continued...