Even in bankruptcy, American Apparel Inc. is still fraught with conflict.
On Thursday, Dov Charney, ousted chief executive and founder of the downtown L.A. apparel maker and retailer, filed an objection to the company’s reorganization plan in a Delaware bankruptcy court.
American Apparel filed for Chapter 11 bankruptcy protection in October and so far, the court has approved the company’s use of a $90 million bankruptcy financing package. A Jan. 20 hearing is scheduled for a final decision on the reorganization plan.
In the document, Charney says he filed an alternative restructuring proposal made by two investors who are new to the company. According to sources close to the situation, the alternative bid seeks to buy the company for more than $200 million. The sources did not want to be identified because the matter is private, they said.
The takeover would reportedly see Charney return to the company in some capacity.
The proposal, according to the filing, would allow the company to exit bankruptcy with $170 million in liquidity, including cash, credit and new equity.
In his objection, Charney asks the judge in the filing to delay confirming American Apparel’s reorganization plan and grant other relief. He alleges the retailer delayed in responding to the investors’ proposal and questions whether or not American Apparel is really looking out for the best interests of stakeholders.
“American Apparel evaluates all bids consistently, and in the ordinary course,” said a spokesman for the fashion firm. “The company remains focused on pursuing the completion of its financial restructuring following its planned bankruptcy court hearing at the end of this month. "
Charney has engaged Houston investment banking firm Cardinal Advisors to help him figure out ways to turn around American Apparel. The bankruptcy stands to wipe out Charney’s more than 40 percent stake in the company.
Cardinal declined to comment for this story.
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