<b>Dov Charney, the founder of American Apparel, told Bloomberg News that he’s “down to” his last $100,000 and sleeping on a friend’s couch.</b> How is that possible?
American Apparel founder Dov Charney made headlines today for telling Bloomberg News he’s down to his last $100,000 and sleeping on a friend’s couch on New York’s Lower East Side as he works to win his company back.
First up, his stake is complicated by a deal he cut with hedge fund Standard General this summer.
The deal boosted his stake in the company from 27% to around 43%. In exchange, he gave up his board seat, the right to buy more shares, and certain voting rights.
The New York Times reported in July: “In essence, he is not permitted to make any move unless Standard General consents, according to the terms of the agreement.”
Charney told Bloomberg Businessweek this summer: “They control the shares. I’m a bystander.”
“My first issue is to save people’s jobs, put the company into a stable financial situation,” he told the magazine. “And then we’ll evaluate whether or not I’ll be the janitor or the CEO or the consultant.â€‰…â€‰I believe Standard General will treat me fairly.”
Here’s one hope for Charney: Private-equity firm Irving Place Capital reportedly proposed buying American Apparel for as much as $1.40 a share.
That offer would involve Charney returning to the company, according to Bloomberg News.
The New York Post reported last week that a potential private-equity acquirer had partnered with Charney.
Charney complained to Bloomberg News about being down to his last $100,000, which is a sizable sum of money for most people.
Certainly enough to afford a hotel or Airbnb in New York City. But perhaps he’s playing it safe without his salary and with his shares apparently locked up.