Dive Brief:

• American Apparel Inc. Monday said that the company and shareholder Jeffrey Kolb have come to an agreement that avoids a proxy fight, which had been brewing. Kolb is withdrawing his intention to nominate people to the board, and the retailer has agreed to establish an advisory committee, led by one of the people Kolb was going to nominate, to “provide insights, guidance and strategic input” for the CEO, according to a filing with the Securities and Exchange Commission.

• Last month, Kolb, who once worked at American Apparel and remains a shareholder, had indicated he would make two nominations to the board; one, Gene Montesano, a co-founder of Lucky Brand jeans, would likely head the new committee. 

• Meanwhile, founder Dov Charney has agreed to an extension of the temporary restraining order that prevents him from attempting a proxy fight or making statements disparaging the company.

Dive Insight:

While American Apparel may have thought it took care of business once it ousted Charney and brought in new leadership, things haven’t turned out that way. American Apparel and founder Dov Charney, whom the company ousted last year, have been tossing lawsuits into each other's turf in the past few months. And the retailer continues to see sales fall.

It was nearly a year ago when Charney and Standard General entered into an agreement that involved Charney gaining shares but ceding control; what has ensued since doesn’t seem to line up with anything he may have agreed to. Charney had been adamant about keeping American Apparel’s made-in-the-USA manufacturing, by workers who are paid and treated well. Some workers in fact have consistently backed Charney, even after his departure.

The continuing public drama has meant that American Apparel hasn’t garnered much attention for its ethical clothing — at a time when that has become increasingly important to today’s young consumer.