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American Apparel board votes to fire founder, CEO Dov Charney

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May 2009: American Apparel founder Dov Charney speaks at a rally in this file photo. (Reuters)

American Apparel Inc.'s board moved Wednesday to fire founder and Chief Executive Dov Charney, citing an "ongoing investigation into alleged misconduct."

The move kicks off a fight at the top of the company, which is already struggling with poor results and debt. The board wouldn't specify the allegations but said it intends to fire Mr. Charney for cause once a 30-day period to resolve the conflict called for in the CEO's contract expires. The company said the move could leave it in default under its credit agreement, prompting discussion with its lenders.

Mr. Charney founded American Apparel as a wholesale T-shirt business in 1998. He parted ways with much of the industry by electing to produce the garments in America while becoming an outspoken advocate of immigration reform and better wages.

The CEO used sexuality to sell his clothes and frankly discussed his own sex life, sometimes wandering around his factory in his underpants. Mr. Charney found himself at the center of sexual-harassment lawsuits brought by former employees.

The board named Chief Financial Officer John Luttrell as interim CEO and named public relations executive and board member Allan Mayer as co-chairman along with David Danziger.

Click for more from The Wall Street Journal

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