Dov Charney’s ex-attorney won a tug-of-war versus a hedge fund over the rights to the American Apparel founder’s Los Angeles mansion — and may be poised to collect the proceeds in a bankruptcy sale, The Post has learned.
Charney — who founded the hipster clothing chain in 1989, only to get ousted from the helm in 2014 under a pile of debt and legal woes — filed for personal bankruptcy in March. 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 said.
Zillow lists the hilltop mansion — where Charney still lives as he runs his current company Los Angeles Apparel — as being in pre-foreclosure with a value of $8.4 million. The residence is on the National Register of Historic Places and was made out of concrete to withstand earthquakes, according to Wikipedia.
A Los Angeles bankruptcy court will hear arguments on Dec. 1 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 said.
Charney in 2015 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. Standard General, in turn, sued Fink saying it was a fraudulent transfer.
In a little-noticed Nov. 18 decision, California Superior Court Judge Maurice Leiter dismissed 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.
“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 the Charney was under fire for sexual misconduct claims. With interest, that claim — which has been upheld by the courts — has since ballooned to $40 million, sources said.
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. Los Angeles Apparel is owned by a trust 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.
Charney’s present attorneys did not return calls.