American Apparel Inc (NYSEMKT:AAP) Hires New CEO to Re-manufacture the Company

Scott Brubaker has been named as interim chief executive officer for American Apparel Inc. (NYSEMKT:APP) The announcement means we are seeing another change in their executive staff following Dov Charney’s dramatic exit earlier this summer. The appointment came following the resignation of John Luttrell who had moved into executive office following the boardroom decision to remove Charney back in June following the latter’s removal for alleged misconduct.

Brubaker comes to this role following his directorship at Alvarez & Marsal and has also held interim leadership positions for a number of speciality retailers and had also been working on American Apparel contracts in an advisory capacity for Alvarez and Marsal earlier in the month.

Meanwhile Dov Charney has been lobbying the board to have his job back with American Apparel , however he has been accused in a number of serious allegations leading to his ousting in June. These include a violation of the companies sexual harassment and antidiscrimination policies as well as further allegations accusing the former CEO of misusing corporate funds. The funds he is accused of misappropriating went on travel expenses for members of his family as well as further personal expense being charged to the company.

It must be noted that Mr Charney’s lawyer has described the allegations made against their as “baseless”, furthermore they went on to describe that the process of Charney’s removal as being illegal. Following this Mr Charney moved to join Standard General LP, an investment company, in order to increase his stake in the company.

More recently Standard General LP have put a deal together to allow them to remove the majority of American Apparels board, with the company receiving $25 million in aid. It has not been made clear whether they believe Charney should be able to return as CEO following the recent allegations.

It would seem that as the allegations against Mr Charney are quite serious the interested parties are hoping to see a resolution to the dispute before taking any further action with regards to his status as CEO of American Apparel.

The Canadian Businessman, now 45, has been working for American Apparel since founding the company at age 20. It is claimed that during this time he has had a hand in every aspect of the business including design, manufacturing and marketing, though his time at the company has not been without controversy.

Allegations of sexual harassment have been made against Charney in the past though he has never been convicted of an offence, with some cases pending and others settled. Mr Charney has vehemently denied all allegations against him and is quoted by CNBC as saying ‘allegations that I acted improperly at any time are a complete fiction,’ and he continues to refute any allegations which have been made against him. But he must understand that the boards position has been made clear and that his position with them is not tenable at this time, though his influence within the company certainly remains.

American Apparel Inc (NYSEMKT:AAP) opened at 0.80 today and at 3:50 pm EDT was trading at a value of 0.804. The stock’s market cap is 139.92 M whereas its range over 52 weeks has been between 0.46 and 1.52. Stock’s inst. Ownership is 10%.