The vision of eccentric and often controversial American Apparel founder Dov Charney managed to woo UK shoppers and UK investors but this week it looks like the company may be on the brink of collapse.

The company said that it may not have “sufficient liquidity” to continue as a going concern and UK private equity group Lion Capital are reportedly looking at ending their relationship with the retailer.

American Apparel grew quickly and was different and interesting when it burst onto the scene in2003 all singing all dancing with neon coloured leggings. It now has over 285 stores in 20 countries and prides itself on manufacturing in Los Angeles.

From the start the company has been dogged by controversy, on the whole relating to its Canadian born founder. Charney has been in trouble with the law in the 80s for illegally selling T-Shirts, he has been reported as calling models sluts and apparently hires and fires staff based on looks alone.

Charney cannot be blasted for having a great idea though and his personality and drive built what could have been a very successful business had it been properly controlled.

One of the best things about the retail industry is its characters; which other industry can boast the likes of Sir Philip Green, Sir Stuart Rose and Mike Ashley? But character has to come with business sense and it seems Charney did not surround himself with enough people who could make sure the cogs and financials of his business would run smoothly.

Having heard him speak at a conference there was an almost naïve optimism about Charney; he described his property strategy as driving round in a car pointing out places where he thought they should have shops. However this was pre-recession and the downturn was always sure to shake out those who did not have the business sense to make their creative ideas work.   

There is obviously still an appetite for the American Apparel offer; a one off sale in East London caused a riot after 2,000 people turned up for the event. Things got so chaotic that ten policeman were injured in the scuffle.

Unfortunately this event may be reflective of business itself if things cannot be sorted; a rush of activity, badly planned without enough security that ends in chaos and injury.

Hopefully a way forward can be found for American Apparel and its employees as it would be a huge shame to lose a business that obviously had a great vision and character but was just poorly executed.

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