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
on Wednesday.
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.
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American Apparel spokesman Terry Fahn declined to provide additional
details. Charney did not immediately respond to calls and emails
seeking comment.
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.
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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
Warrier)
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