Charney, who has been repeatedly targeted in sexual harassment
lawsuits, will be terminated for cause after a contractual 30-day
cure period, the Los Angeles-based company said in a statement late
The company, known for its racy advertising and bright
"Made-In-America" clothes, said it named CFO John Luttrell as
interim chief executive as it works with a search firm to look for a
permanent CEO. The retailer also appointed Allan Mayer and David
Danziger as co-chairmen.
"We take no joy in this, but the board felt it was the right thing
to do," Mayer said in a statement.
Charney, 45, who founded American Apparel's predecessor companies in
1989, has been at the helm since 2007 when the company went public.
American Apparel spokesman Terry Fahn declined to provide additional
details. Charney did not immediately respond to calls and emails
In 2011, a former employee had accused Charney of keeping her as a
teenage sex slave, amid fear she might otherwise lose her job. She
also sued American Apparel and its directors for failing to stop
Charney from acting as a "sexual predator." (http://reut.rs/1qudaUP)
The company, which is struggling with weak sales and heavy debt,
said the management changes may have triggered a default under its
credit agreements, adding that it will be in discussions with its
lenders for a waiver of the default.
[to top of second column]
In February the company had tapped restructuring advisers after it
had reached $240 million in debt and had come close to breaching
loan covenants, debt terms designed to protect its lenders,
according a media report.
The company's shares, which have lost more than two-thirds of their
value over the past year, closed at 64 cents on the American Stock
Exchange on Wednesday.
(Reporting by Sampad Patnaik in Bangalore; Editing by Gopakumar
[© 2014 Thomson Reuters. All rights
2014 Reuters. All rights reserved. This material may not be
published, broadcast, rewritten or redistributed.