Charney was able to reach a deal with the American Apparel board, which will fetch the retailer $25 million from Standard General to pay off persistent creditors and bolster its finances, rather than file for bankruptcy. The deal will also calm down the intense battle between Charney and the company's board, at least for the time being.
"This truly marks the beginning of an important new chapter in the American Apparel story," Allan Mayer, a board co-chairman, said in a statement. "With the support of Standard General, we are confident the company will finally be able to realize its true potential."
Charney will be given access to a copy of his email and will not have direct access to any of the retailer's computer systems, according to a securities filing detailing the deal. Charney and four other board members will resign and current co-chairmen Allan Mayer and David Danziger will remain on the board. Three of the new board members will be selected by Standard General and two others chosen by the retailer's current board and the investment firm.
FTI Consulting will be employed to conduct an investigation into Charney's conduct at the company, one of the reasons he was ousted. Charney will keep his base salary and will have to wait for the investigation's findings to know whether he will have a future at the company or not.
The deal also reiterates American Apparel's commitment to manufacturing its clothing the U.S. and not overseas like most of its competitors. "Made in USA' branding" and a sexually provocative marketing campaign have been hallmarks of the brand.
"If you're not made in America, you're just another guy selling T-shirts, and that's not a good position to be in," David Glazek, a partner at Standard General, said last week.
Charney was removed as CEO and Chairman of American Apparel last month, after an internal investigation found him guilty of alleged misconduct. He was suspended at the time, because his contract contained a 30-day wait period before he could be fired.