Ex-Lawyer of American Apparel Founder Dov Charney Scores Big on Hedge Fund Battle Over Los Angeles Mansion - The Jewish Voice
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Ex-Lawyer of American Apparel Founder Dov Charney Scores Big on Hedge Fund Battle Over Los Angeles Mansion

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Ex-Lawyer of American Apparel Founder Dov Charney Scores Big on Hedge Fund Battle Over Los Angeles Mansion

Edited by: TJVNews.com

It appears that the founder of the American Apparel company, Dov Charney is back in the news. The New York Post reported that his ex-attorney won a legal battle against a hedge fund over the rights to Charney’s Los Angeles mansion and may be all set to collect the proceeds in a bankruptcy sale, The Post has learned.

Having founded the clothing chain in 1989, Charney faced a voluminous amount of debt and legal imbroglios and got booted from the top spot of the company in 2014, the Post reported. In March, Charney filed for personal bankruptcy. Under his reorganization plan, Charney has agreed to abandon his 20-room spread in LA’s Silver Lake neighborhood, a source close to the situation told the Post.

The hilltop mansion is being listed by Zillow and the Post reported it is valued at $8.4 million in its pre-foreclosure state. Currently, Charney is living there as he operates his current company Los Angeles Apparel. The residence is on the National Register of Historic Places and was made out of concrete to withstand earthquakes, according to Wikipedia, the Post reported.

On December 1, a Los Angeles bankruptcy court will hear arguments on whether to approve Charney’s plan, which also calls for him to surrender his Arya’s Vintage Closet clothing brand based in Costa Mesa, Calif., the source told the Post.

The Post reported that in 2015, Charney transferred the deed of trust on the house to his then-lawyer Keith Fink months after hedge fund Standard General sued him over American Apparel’s bankruptcy. Charney at the time allegedly owed money to Fink for unpaid legal services, the Post reported. Standard General, in turn, sued Fink saying it was a fraudulent transfer.

California Superior Court Judge Maurice Leiter decided on November 18th to dismiss Standard General’s case, ruling that the house was so deeply “underwater” with debt at the time of the transfer that it couldn’t be considered a sale to satisfy legal expenses, the Post reported.

“As we have advised the court from the very start of this litigation in 2018, Standard General’s claims against Keith Fink were dead on arrival,” Fink attorney Olaf Muller told The Post. “We intend to seek the full amount of fees, costs, and sanctions against Standard General and its counsel for knowingly filing and litigating meritless claims against Fink for the past four years.”

Standard General CEO Soo Kim — who, as The Post previously reported, has been trying to make Charney’s life miserable — will likely appeal the ruling, sources said.

Kim’s firm is also expected to object to Charney’s bankruptcy plan, alleging that Charney filed it to avoid paying back $20 million that the hedge fund loaned in 2014 when Charney was under fire for sexual misconduct claims, the Post reported.

Sources also told the Post that with interest, that claim — which has been upheld by the courts — has since ballooned to $40 million.

If the court approves Charney’s bankruptcy plan, the house will go into foreclosure and Fink will have a claim senior to Standard General’s position, sources said. The Post reported that Los Angeles Apparel is owned by a trust and is not part of the proposed bankruptcy.

Kanye West says he hired LA Apparel this year to make his “White Lives Matter” T-shirts but Charney refused to sell them after West’s anti-Semitic tweets, the Post reported.

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