Read the extract below from an article entitled ‘Suits overshadow the Ts at American Apparel’ by Joann Lublin that appeared in The Australian on 28 May 2015. 

Nearly a year after moving to oust chief executive Dov Charney, American Apparel continues to fight with its controversial founder on multiple fronts. Mr Charney has filed an arbitration claim accusing the company of breach of contract and wrongful termination and has sued American Apparel and its lead director, alleging they defamed him. Two shareholder lawsuits accuse the company of proxy fraud in connection with Mr Charney’s termination. Another lawsuit filed by Mr Charney’s lawyer on behalf of former employees that seeks class action status accuses the company of failing to give about 200 workers proper notice before firing them. American Apparel has denied the claims and shot back with a lawsuit of its own alleging that Mr Charney co-ordinated the various complaints as part of an attempt to ‘wrest control of the company away from the board and management and reinstate himself as CEO and a director’ in violation of the standstill agreement.

REQUIRED

On the basis of the brief information provided in the extract above, you are to suggest how American Apparel should account for the action being taken by the former executive.