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American Apparel Re-Hires Fired Founder as Consultant

Dov Charney was previously fired from the company he launched.

ByABC News
July 10, 2014, 4:01 PM

— -- American Apparel has agreed to a temporary truce with ousted founder Dov Charney, including re-hiring him as a "strategic consultant."

Soon after Charney was fired last month for alleged misconduct, Charney and his attorney accused the retail company's board of directors of illegally firing him.

The board cited him for alleged improper use of company funds and helping leak nude photographs of a former worker who was suing him.

How American Apparel Will Be Different Without Dov Charney

Battle For American Apparel Continues

"Mr. Charney will serve as strategic consultant until the end of the investigation. Based on the findings of the investigation, the committee will determine if it is appropriate for Mr. Charney to serve as CEO or an officer or employee of American Apparel," American Apparel officials said in a statement.

The board announced the agreement on Wednesday. The deal also stated five of the seven board members, including Charney, will voluntarily step down. The company said there is an ongoing investigation into Charney’s alleged misconduct, which is overseen by an independent board committee.

Charney and Standard General L.P. are the owners of nearly 44 percent of American Apparel's outstanding stock. This agreement prohibits Standard General and Charney "from acquiring any additional shares in American Apparel and limits their vote to no more than one third of the Company’s shares on any issue put to stockholders; their remaining shares would be voted proportionately to the vote of other stockholders."

American Apparel has about 249 retail stores in 20 countries with about 10,000 employees as of May 31, according to the company.

"As part of the agreement, Standard General affirmed its support for American Apparel’s sweatshop-free, 'Made in USA' manufacturing philosophy and commitment to maintain the Company’s manufacturing headquarters in Los Angeles," the company said.