Talks between American Apparel and an investor group affiliated with Dov Charney appear to have hit a wall, a day before a judge is set to rule on a proposed plan for the company’s emergence from bankruptcy.
Hagan Capital Group and Silver Creek Advisors went in on a bid late last year offering $235 million in a package that would have brought Charney back into a leadership position at the company he founded. That offer was revised to $300 million about a week ago. And, as of last week, it appeared a third offer was imminent, according to a source close to the matter at the time.
Those conversations have apparently stalled.
American Apparel in court today filed a letter to the judge complaining about a request that came in late Monday from attorneys for Charney requesting multiple documents.
“In short, Mr. Charney had every opportunity to seek discovery earlier and this last-minute set of requests on the eve of the confirmation hearing is gamesmanship that the court should not countenance,” the American Apparel letter said.
The letter went on to cite the alternative proposal, described as “dead and no further bids are forthcoming,” which it said was based on deposition from Hagan Capital managing partner and group president Chad Hagan.
Hagan, who was deposed yesterday, cried foul at the use of certain parts of his deposition in the letter to the judge.
“They cut and pasted words from hundreds of pages of documents,” Hagan said in an email to WWD. “We are interested in doing a deal so long as they show good faith and are willing to negotiate. So far the board and the bondholders have not been willing to do so.”
Charney’s lawyer shot back today with a letter to the judge calling American Apparel’s letter an attempt “to get a head start on tomorrow’s hearing.”
“Mr. Hagan’s deposition answers, viewed as a whole, reflect testimony of a sophisticated businessman who is frustrated with what he believe[s] has been an unfair process in terms of consideration of the investors’ successive proposals,” Charney’s lawyer’s letter read. “In other words, Mr. Hagan may not be interested in bidding against himself yet another time, to no avail.”