American Apparel Board Kicks Out Founder And CEO Dov Charney On Alleged Misconduct

Updated: The retailer's board replaced Charney as chairman and said it intends to fire him "for cause." A spokesperson declined to comment; Charney won't talk.

American Apparel's board is ousting controversial founder Dov Charney as both chairman and chief executive officer citing "alleged misconduct," the company said in a surprise release late Wednesday.

The board voted to replace Charney's chairman position with two other directors, and will conduct a search for his replacement as CEO, according to the statement, which was distributed at 10:30 p.m. ET. The company's chief financial officer, John Luttrell, will serve as interim CEO in the meantime.

"The board's decision to replace Mr. Charney grew out of an ongoing investigation into alleged misconduct," the company said in the statement.

"We take no joy in this, but the Board felt it was the right thing to do," Allan Mayer, one of the directors who will be co-chairman, said in the statement. "Dov Charney created American Apparel, but the Company has grown much larger than any one individual and we are confident that its greatest days are still ahead."

A spokesman for Sitrick & Co., an external press contact, declined to comment beyond the release or answer questions about the nature of Charney's alleged misconduct and the investigation. The termination will be effective after 30 days, as per the terms of his agreement, the statement noted. Charney picked up a call from BuzzFeed and said "Hello?" before quickly hanging up. The phone now rings without answer, then plays a message that says the voicemail box has not been set up yet.

Charney told BuzzFeed in an interview published in February that he was still in the process of building American Apparel, despite the management concerns that have haunted the company for years, and bristled when pressed on the topic of succession planning.

"I don't have people bursting in my house yet telling me to take a hike," Charney said.

"Who else is in the founder-led companies that are big out there?" he asked at the time. "Everybody's a 5 or a 6 or approaching a 7. I'm in my mid-forties so I'm building a team and I'm widening it, but I'm just cracking my knuckles and getting started. When I'm in my mid-fifties, I'm going to start looking at how to widen, you know, start passing on the torch completely. But right now, I'm just figuring where I want to drive the bus."

Since then, American Apparel has had to sell additional stock to keep creditors at bay, and rumors have floated about a restructuring. In today's statement, American Apparel said that the management change means the company "may have been deemed to have triggered an event of default under its credit agreements and will be in discussions with its lenders for a waiver of the default."

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