A Delaware court judge on Friday ordered a quiet period on litigation between American Apparel founder Dov Charney and Standard General.
The 13-day suspension in activity leaves room for a judge presiding over the legal battle between the two in California to determine whether a delay in proceedings should take place as American Apparel winds its way through bankruptcy reorganization.
Charney has waged an all-out legal battle against the company he founded and was ousted from late last year, along with separate suits against Standard General, the hedge fund he has alleged colluded to trick him into a deal that ultimately resulted in his removal from American Apparel.
The Los Angeles firm filed for Chapter 11 bankruptcy protection early Monday, which was at the center of arguments that took place during Friday’s hearing before Delaware Chancery Court judge Andre Bouchard, which was first reported by Dow Jones Business News. Counsel for Standard General raised the question of whether litigation with Charney could interfere with the company’s bankruptcy proceedings.
Automatic stays immediately go into effect once a bankruptcy filing occurs, halting any fresh legal action against an entity as it works through its reorganization.