American Apparel is a Los Angeles-based clothing chain that designs and manufactures apparel. The company reached a deal with investment firm Standard General to receive up to $25 million to bolster its finances. The pact is intended to help pay off a $10 million loan from investment firm Lion Capital. The agreement triggers a major board shakeup: five of seven directors, including founder and former CEO Dov Charney, will voluntarily step down and be replaced largely by directors selected by Standard General. The deal creates an independent board committee to oversee an investigation into alleged misconduct by Charney; under the terms Charney is suspended from board and leadership roles and will serve only as a strategic consultant during the probe. The company also affirmed its commitment to maintaining its manufacturing headquarters in Los Angeles. American Apparel is a Los Angeles-based apparel retailer known for its hipster customer base and racy advertising, and has faced criticism over its "Teenagers Do It Better" T-shirts. The company operates a Los Angeles factory where, less than a year ago, a worker died while trying to fix a knitting machine. CEO Dov Charney has been accused on multiple occasions of sexual harassment by former employees. American Apparel has struggled to avoid bankruptcy since 2010 and has endured a series of scandals that undermined its reputation. Financially, Crystal Financial — a Boston firm of which billionaire George Soros is the top investor — is set to extend an $80 million credit line to the company. Despite the troubles, sales rose 13 percent year-over-year last month, according to MarketWatch, amid reports the company has cracked down on shoplifting that may have alienated its core customers.

Total raised

$105M

Funding rounds

2

Latest round

Equity

Latest activity

Jul 2014