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How Dov Charney could end up back at American Apparel

Dov Charney technically hasn't been fired by American Apparel. He's only been suspended for 30 days. He's also technically still on the board.

And so, technically, he could end up back at the company.

American Apparel CEO Dov Charney poses for a portrait at one of the company’s retail stores in New York.
Keith Bedford | Bloomberg | Getty Images
American Apparel CEO Dov Charney poses for a portrait at one of the company’s retail stores in New York.

In an agreement between American Apparel and investment firm Standard General, the company will create an independent committee from a newly constructed board to oversee an investigation into whether Charney violated his contract, warranting termination. If Charney is exonerated, company co-chairman Allan Mayer told CNBC, "I will be the first to apologize to him."

Mayer also said he would resign as a result.

It has been a dizzying couple of weeks for the struggling apparel maker after the boardforced Charney out, accusing him of violating a variety of company policies, from allegedly using company funds to pay off former employees who'd accused him of sexual harassment, to repeatedly violating the company's sexual harassment and anti-discrimination policy. Charney fought back, teaming up with Standard General to accumulate 44 percent of outstanding shares, and American Apparel—too late—established a "poison pill" policy.

Read MoreCan Dov Charney be 'cured'?

This week, however, the two sides reached something of a truce. Standard General has agreed to stop buying shares and to limit its voting power, and it is giving the company a $25 million lifeline. Mayer told CNBC that the company is "very excited" to have a partner that shares its goals for rebuilding the company's debt structure and turning the business around without compromising American Apparel's core vision of being sweatshop-free and "Made in USA."

"What we've always needed and hoped for was a financial partner ... who could put us back on the road we should be on," Mayer said. Is this a ploy by Charney to regain control? Mayer said he was "not concerned at all," adding that Standard General's interest in American Apparel "is not an endorsement of Dov."

As part of the new agreement, five of the seven board members, including Charney, will resign. They will be replaced by three board members nominated by Standard General, and two nominated jointly by the company and the investment firm. Only co-chairmen Mayer and David Danziger will remain, and one of them will be on the committee overseeing the investigation into Charney's conduct.

Read MoreOusted Charney reports 42.98 percent stake in American Apparel

Mayer said Standard General has already begun providing suggested board nominees. "They are very impressive," he said, without naming them. All have "strong experience in retail and apparel." He hopes to have a full slate ready to be voted on in 10 to 15 days at a minimum. "We want to complete this sooner rather than later."

Has there been any impact on sales from all the negative headlines? "Not that we can tell," Mayer said, adding that American Apparel's 10,000 employees, however, find the situation "a big disconcerting."

Even though the company's stock market valuation is miniscule, he said, "We're being covered like a Fortune 500 company...everyone knows American Apparel."

For that, he credits Charney, in both positive and negative ways. "Nobody expected Dov to fold his tent and walk away," Mayer said. "The irony is the ally he found…turned out to be our ally."

Read MoreCan American Apparel CEO Dov Charney be 'cured?'

There's a lot riding on the outcome of the investigation into Charney's behavior and whether a new board committee will fire him or bring him back. Lion Capital has already moved to declare American Apparel in default on a $9.9 million loan triggered by Charney's dismissal. That move could potentially end a $50 million line of credit from Capital One.

Mayer argues no trigger has been hit, as Charney is technically suspended, not terminated. That can't happen before July 19, next Wednesday. "We're talking to Capital One and keeping them informed," Mayer said. "They're comfortable."

It's extremely unlikely any decision on whether Charney should be fired can happen before his suspension ends on July 19. What happens then isn't exactly clear. Mayer said that if the committee being formed out of the new board eventually decides Charney must go, then "Dov made it clear he will abide by the process."

But does Mayer think that American Apparel's volatile founder could be cleared of violating his contract and come back to run the company?

"It's important," he said, "to keep an open mind."

—By CNBC's Jane Wells

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