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American Apparel founder Dov Charney loses bid to win back control of retailer after approval of bankruptcy plan

A bankruptcy judge on Monday approved a reorganization that hands control of American Apparel to senior lenders, rejecting Charney's alternative proposal and eliminating what may have been his last shot at retaking control of the clothing chain he started as a college student.

American Apparel Inc. founder Dov Charney requires a new plan.  

U.S. Bankruptcy Judge Brendan Shannon in Wilmington, Delaware, Monday approved a reorganization that hands control of the clothing retailer to senior lenders, rejecting Charney’s alternative proposal and eliminating what may have been his last shot at retaking control of the clothing chain he soon started as a college student.

Senior lenders including Monarch Alternative Capital LP will trade their debt for charge of the retailer, reducing its liabilities by about US$200 million. Charney, who had been trashed in 2014, had assembled a group of investors to back his US$320-million takeover plan. He claimed a “faithless” board and investors conspired to shut him out.

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