The American Apparel founder Dov Chavney might stay in a role similar to a chief executive officer in American Apparel, months after being ousted as CEO by the board.
Since then, seven board members have resigned and a New York hedge fund has stepped up to decide Chavney's future with the brand. A decision was supposed to be made in September, but the former CEO's future in the company is still undecided. However, some insiders shared with Bloomberg that some board members want to keep Chavney in a role similar to a CEO.
In June, the board of directors Chavney appointed himself ousted the unconventional CEO under the reasons of misconduct. They gave him the option to resign, give up his voting rights, receive a multimillion dollar severance fee and to stay on as a consultant. If not, the board of directors would boot him out for misconduct.
After Chavney refusing both of the options given to him, the board released a press release saying the Chavney was ousted as chairman and suspended as CEO. The board members Allan Mayer David Danziger became co-chairman.
Chavney said in June, "They're concerned that an unconventional leader somehow damages the company's chances of success."
The founder sought the help of New York hedge fund Standard General to help him regain his footing in the company. The hedge fund started buying shares and lent Chavney $20 million dollars for him to buy back the shares.
American Apparel's board of directors tried to prevent Chavney from gaining control of the company's shares, but by then, the former CEO already owned 43% of the company. However, Chavney let Standard General to control his shares in the company and to dictate his future with the company.
Earlier this week, American Apparel that Scott Brubaker would step up to become the interim chief executive, replacing John Lutrell who's filling in as CEO.
