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Recently ousted American Apparel CEO Dov Charney made it clear that he would not go quietly. His plan to take over the board or directors and regain his job may at first have seemed desperate, but experts are now saying Charney stands a real chance of taking back control of the company he started. 

David E. Rosewater, a partner at Schulte Roth and Zabel who specializes in mergers and acquisitions, told The New York Times, “The board, on its own, suspends its chief executive, who then turns around and manages to acquire or control enough of the vote such that they might be able to come back and throw out the mutineers. That is very, very unusual."

Though Charney is, without a doubt, alienating and controversial to many, he does have some supporters. Lion Capital, a long time lender to American Apparel, has continued to support Charney. Lion has the right to two board seats, and can convert holdings to voting shares. This relationship could help Charney secure a spot back on the board. 

Late last week, Charney raised his ownership stake in the company from 27 percent to 43 percent. He is just seven percent away from having a majority say in American Apparel once more. Charney partnered with an investment firm, Standard General, to get to 43 percent. 

American Apparel is not taking Charney's approach lightly. They issued a poison pill when they learned of Charney's partnership with Standard General. A poison pill, more formally known as a shareholders rights plan, is meant to deter takeover by an unwanted party. In this case, if a person or group with at least 15 percent of shares increases their ownership by 1 percent, the poison pill is activated. The company floods the market with inexpensive shares, to dilute existing shares. This makes everyone's stake smaller. 

If Charney does succeed in regaining that last seven percent, he could see major lawsuits. Charney is already the subject of an FTI Consulting investigation, over his personal and professional behavior while working for American Apparel. The board could sue, and other shareholders could also sue. Charles Elson, the director of John L. Weinberg Center for Corporate Governance at the University of Delaware, told The New York Times, "I’d be surprised if the whole thing didn’t end up in litigation. At this point, everything becomes debatable."

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