American Apparel Inc. which is the brand of teenage clothes, has bankrupted recently. According to the news, they have nearly $300 million of debt and they planned to exchange their bonds to equity, accounted for more than $200 million. There are several reasons for the bankruptcy of the company. Firstly, many competitors in the global market such as Zara, H&M and Forever 21, make American Apparel lose a great amount of consumers. Furthermore, company’s clothes are expensive and related to bad quality in consumers’ mind. But in my opinion, the most important reason is that the founder and former CEO, Dov Charney, is notorious for his misconduct.

Considering the leadership of the former CEO, he is incompetent. In his leading period, the selling quantity of the products dropped dramatically. In this situation, he still did not pay attention to work. Instead, he misused the property of company and kept inappropriate sexual relationships with models and employees. Maybe Mr. Charney is a successful entrepreneur with several excellent abilities to found the company, while he is not a good CEO for American Apparel. CEO should lead the company for sustainable success. It is less about becoming creativity and focusing on one hub, but more about harnessing several departments and considering the sustainability. Obviously, Mr. Charney cannot meet these requirements.

http://www.businessfinancenews.com/24673-american-apparel-inc-app-files-for-chapter-11-bankruptcy-protection/

Reference

http://www.cbc.ca/news/business/former-ceo-dov-charney-sent-pornographic-emails-american-apparel-claims-1.3125417

http://www.cbc.ca/news/business/american-apparel-chapter-11-bankruptcy-1.3256563

http://www.entrepreneur.com/article/245368