American Apparel to fire founder accused of sexual misconduct

Clothing and accessories retailer American Apparel ousted its founder Dov Charney as chairman and moved to fire him as CEO and president of the debt-saddled company following an ongoing investigation into sexual misconduct allegations. His dismissal as chairman is effective immediately.

Charney, who has been repeatedly targeted in sexual harassment lawsuits, will be terminated after a contractual 30-day period, the Los Angeles-based company said in a statement late Wednesday.

The board's statement cited an "ongoing investigation into alleged misconduct," without giving details.

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 seeking comment.

In 2011, a former employee 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."

Charney has acknowledged having sexual relationships with workers, but said they were consensual. Some of the suits were settled, while others are pending, according to the Los Angeles Times. 

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.

In February the company had tapped restructuring advisers after it had reached $240 million in debt and had come close to breaching loan obligations designed to protect its lenders, according a media report.

The company manufactures clothes and sells them in 249 retail stores in 20 countries, employing about 10,000 people. It plans to maintain Charney's commitment to sweatshop-free U.S.-based manufacturing, Luttrell said in a statement.

Wire services