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American Apparel's former CEO talks about the end of the iconic brand

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LOS ANGELES, CA - JANUARY 17:  A sign is posted on the exterior of an American Apparel retail store on January 17, 2017 in Los Angeles, California. American Apparel has begun laying off 2,400 workers at their factories in Southern California as the company preapres to shutter its 110 retail stores over the next few months. The American Apparel brand and a portion of the manufacturing equioment was sold in a bankruptcy court auction to Canadian clothier Gildan Activewear for $88 million.  (Photo by Justin Sullivan/Getty Images)
Justin Sullivan/Getty Images
A sign is posted on the exterior of an American Apparel retail store on January 17, 2017 in Los Angeles, California.

Dov Charney, who separated from the company in 2014, talks about the conditions surrounding his ouster and factors that went into the company's downfall.

It was a great LA success story: A company making clothes here that could compete with cheap imports. 

But now, it looks like curtains for American Apparel.

The brand has been sold in a bankruptcy auction, laying off roughly 2,400 workers. It will close facilities in Downtown LA, South Gate and Garden Grove.

What happened? 

For one view, Take Two reached Dov Charney, the founder of American Apparel who separated from the company in 2014.

During the interview with Take Two's Libby Denkmann, Charney talked about the conditions surrounding his ouster and some of the factors that went into the company's downfall.

Interview highlights

What ended up being American Apparel's undoing and led to your departure?

American Apparel failed because of corruption and incompetence. The company was hijacked by financial forces and it was destroyed. This was a company that was the pride of the worldwide apparel industry. It was the first company that was able to generate serious cash flow ... This company was a huge success, and at the same time, we were able to pay living wages to our workers. 

Then, someone had the great idea that the company should be sold. I was offered $100 million dollars for my stake in American Apparel. I called my mother and I called my father and I said, "Mom, Dad, I don't want to sell the company, I love this company, but I'm passing up some serious money and I want to build it for the rest of my career." 

A few week later, there was an annual meeting ... and I voted for three board members, who collaborated with two others, total of give, and they said "Either give us the voting rights to your stock, or we're going to fire you with cause and create a media firestorm."

And they ended up forcing you out. Part of what the board pointed to was a flurry of sexual harassment allegations against you ...

There was no flurry. That's fake news.

None of these have been proven in court, but a number have been settled.

I'd like to say something. There was no flurry of sexual harassment lawsuits. There haven't been any sexual harassment allegations since January of 2011. 2012 went by, I was rehired. The company disclosed ... that the sexual harassment lawsuits were frivolous and were baseless. This was all signed by the board members that were purported to oust me.

Some might say there were other issues, sexual harassment allegations aside, and that the board was trying to save the company. Do you believe you could have turned American Apparel around, if given the chance?

The company was performing, it was turned around. There was no indication that we couldn't afford the debt that we had. In fact, we were able to raise $30 million dollars 40 days prior to my ousting by way of a security sale. We were performing, we had the cash to perform, we were generating cash flow, this was a huge success ... there was no issue relating to the debt. That's a fiction. The flurry of sexual harassment lawsuits, that's a fiction. 

Do you feel like when you left, the 'cool factor' was gone?

It's not about the cool factor. They completely disemboweled the company ...  They ended up changing how the company was doing business. They put in all these consultants. They fired creatives that I had cultivated for a decade. They removed the entire ethos of the company. 

The second part of this conversation with Dov Charney will air on Wednesday. He speaks about the possible future of his new company and if he'll be recruiting laid-off American Apparel workers.

Click the blue player above to hear the interview.

*Note: The audio posted is extended from the originally aired conversation. This interview was also edited for clarity.

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