If you thought the saga between downtown L.A. apparel maker American Apparel Inc. and its founder and former chief executive Dov Charney was finished, think again.
Charney announced Friday that he has engaged Houston investment banking firm Cardinal Advisors to help him figure ways to turn around the slipping fortunes of the company. American Apparel filed for Chapter 11 voluntary bankruptcy in October, which stands to wipe out Charney’s more than 40 percent stake in the company.
According to the announcement, Charney, investors and industry executives are exploring plans to “develop a value-maximizing solution for the company, its thousands of manufacturing, retail, administrative and creative employees, its customers, as well as the Los Angeles community…”
David Felman, a partner with Cardinal Advisors, confirmed Charney engaged his firm but declined to provide further details. Cardinal works with middle-market companies on mergers and acquisitions, value creation and restructuring, according to its website.
Felman previously worked for American Apparel’s current financial advisor, New York-based investment banking firm Moelis & Co. He spent seven years there before leaving the firm last year. American Apparel hired Moelis in December of 2014, according to bankruptcy documents, to consider potential deals, such as a sale of the company, new debt, equity or other options. For the retailer, Moelis contacted 90 parties, of which 18 engaged in due diligence but none resulted in any deals.
Charney said in the release that by working with new and existing investors and a team of industry leaders, he would be able to generate long-term value for the retailer’s stakeholders and revive its sales and profitability and fair wage job opportunities. In an interview with the Business Journal, Charney added that Cardinal contacted him about a month and a half ago and offered to work with him on a bid.
“What’s most important to me is to preserve the business model I built, and these jobs which are so precious,” Charney said. “This company is so unique; it would be tragic for this company to disappear.”
American Apparel’s unpaid creditors have until Jan. 7 to vote on the company’s bankruptcy plan.
"American Apparel appropriately evaluates all indications of interest in the company in the ordinary course," an American Apparel spokesperson said. "It is premature to speculate on any such indications of interest."
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