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Although the plan was to push the company out of its current bankruptcy, American Apparel dodges Dov Charney’s attempt at buying the company, with bankruptcy judge Brendan Shannon ruling in favor of AA’s current debtors.
According to the judge, when putting Charney’s plan of pushing the company with a backing of $300 million face to face with the company’s debtors’ plans of turning around the company, the latter party was deemed the most beneficial. This decision was rather tough to make, bearing in mind that Charney was the man behind the company ever since he started it back in 1989.
But his position in the company was removed following several sexual misconduct accusations made by various parties. Charney claimed that this smear campaign directed towards him by staff members of the company were unfair to say the least, claiming that American Apparel was effectively stolen from him.
The bankruptcy judge did mention that his decision was not in any way influenced by Charney’s dismissal in any way. He simply took into account which party had the most effective plan in putting the company back on track in the fastest manner possible. The new CEO of the company, Paula Schneider has stated that the judge’s ruling is extremely beneficial for all of the company’s employees and customers, as well as the business itself.
The backing private equity firms behind Charney’s $300 million bid, Silver Creek Capital and Hagan Capital Group, were disappointed in the court’s ruling as well. The latter company’s Managing Partner, Chad Hagan, has claimed that the decision of kicking Charney out of the company was extremely short-sighted, given the fact that he is the cornerstone of American Apparel through his unparalleled entrepreneurial creativity and vision.
The future of the company, even after the judge’s decision, is still extremely murky to say the least. But this is not limited to American Apparel, with more and more companies suffering from bankruptcy due to similar business outages across the US. This is more than likely due to how consumer behavior shifted from brick-and-mortar retailers towards the digital environment. Even if one can say that American Apparel products can be found online as well, keeping several local stores open no longer has a positive cost-to-benefit rate at all.
Hopefully, following the news that American Apparel dodges Dov Charney’s attempt at buying the company, the debtors plan will prove to be effective in keeping the company afloat after it manages to surface from its current bankruptcy. Only time will tell how this decision will affect its financial future, as well as showing if Dov Charney will continue to attempt at buying his old company or simply opt to start a new one.