Part of Dov Charney's MO for American Apparel has been himself—as the face and personality behind the brand. As that personality became embroiled in a series of controversial legal battles over accusations of sexual harassment, financial problems ensued.
Now, in order to save the brand from bankruptcy, a group of Canadian investors has maneuvered a deal that, when all is said and done, dilutes Charney's ownership to less than half, until at least 2013, WWD reports. At that point, should shares reach certain benchmark prices once again, Charney will be able to acquire more shares and, ideally for him, regain majority control.
Lead investor Michael Serruya made a point to emphasize their confidence in and reliance on Charney as an integral component to the brand, dismissing the accusations against him as "a shakedown", and telling WWD:
"I think American Apparel is a tremendously strong brand and Dov is a remarkable visionary and entrepreneur. I think he is one of the top trend-setters in America today. I think given the proper resources, American Apparel has the ability to really deliver results...The big reason for our investment was Dov. He really embodies the soul of American Apparel."
Call it a lifeline—the infusion of resources should determine in the near future if American Apparel can come back.