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Komfie Manalo, Opalesque Asia: A shareholder class-action suit filed on Wednesday accused New York-based hedge fund Standard General of holding American Apparel hostage. It would reportedly reap huge benefits if the clothing company declared bankruptcy.
Standard General is the controlling stockholder at American Apparel, reported California Apparel News.
In the lawsuit, the shareholders accused the former and current board members of the apparel firm of breaching their fiduciary duties by claiming in proxy statements that Dov Charney, the company’s founder, was an integral part of the brand. The new set of board members were elected in June and suspended him as the firm’s chief executive and eventually removed him as the chairman of the board. Charney was removed as American Apparel’s CEO in December 2014.
Shareholder and former American Apparel employee Eliana Gil Rodriguez said in the lawsuit filed in the Court of Chancery in Delaware, that Standard General was able to gain control of American Apparel after its share prices dropped. Charney owned 43% of American Apparel’s stock, but a secondary stock offering of 61 million shares in March reduced his share to 27%, says the report.
This is the fourth shareholder lawsuit against the company in three weeks, according to the ...................... To view our full article Click here
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