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Alternative Market Briefing

Hedge fund Standard General sues American Apparel’s ousted CEO Dov Charney

Wednesday, July 15, 2015

Komfie Manalo, Opalesque Asia:

New York-based hedge fund Standard General LP on Monday filed a lawsuit against American Apparel Inc’ former Chief Executive DovCharneyover his alleged failure to fulfill his promises, and sought an injunction to stop Charney from his "meritless" and "destructive actions" against the clothing firm, said Gnom.es.

Charney founded American Apparel but was suspended by the company’s board in June 2014 over accusations of fund misuse, and failure to prevent a subordinate from posting inaccurate blog entries against former employees. The board finally ousted him as CEO of the firm in December last year.

Standard General, which is a controlling stakeholder of American Apparel, said it had struck a deal with Charney in June last year in which he agreed to give up his voting rights in exchange of a loan to increase his stake in American Apparel and eventually gain control of the firm he had founded.

Charney allegedly put up his original stake in American Apparel as collateral and promised to surrender the new shares he bought as well, but failed to do so, the report says.

But Charney’s lawyer, Keith Fink, described the fresh lawsuit as a "smokescreen" to divert the attention from an earlier lawsuit filed by his client in June, alleging that Standard General and others had conspired to oust him from American Apparel.

In May, ......................

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