Activist fund Browning West has sued Gildan Activewear (PPAI 250187, Platinum) – ranked the No. 38 supplier in the inaugural PPAI 100 – and its board of directors in the latest chapter of the fiery saga over who should lead the Montreal-headquartered company.

The Los Angeles-based investment firm, which holds about 5% of Gildan’s outstanding shares, has requested that the Quebec Superior Court ensure that the apparel manufacturer’s annual meeting goes on “without delay and with the oversight of an independent chair” on May 28, The Canadian Press reported.

  • During the meeting, Browing West – backed by Gildan’s largest shareholder Jarislowsky Fraser – aims to repopulate the board to reinstate co-founder Glenn J. Chamandy, who was ousted as CEO in December after the board lost confidence in him.

Gildan’s board has also been accused of failing to perform its due diligence before naming apparel industry veteran Vince Tyra as Chamandy’s successor. Tyra allegedly had an affair with an employee who reported directly to him while he was CEO of alphabroder more than two decades ago – and who now holds a senior leadership position at Gildan, The New York Post reported.

  • An anonymous source close to Gildan denied that the relationship was an affair, claiming that, at the time, Tyra was separated, and the employee was divorced, The Post reported.
  • The source added that there’s no policy preventing someone from being hired because they had a consensual relationship with a current Gildan employee more than 20 years ago.


Lawsuit Details

The lawsuit accuses Gildan and its board of disregarding the rights of shareholders by “pursuing a strategy of entrenchment, obfuscation and disparagement of dissenting shareholders, improperly placing their own personal interests ahead of the interests of the company and its shareholders,” according to a press release from Browing West.

The lawsuit alleges that Gildan and its board have:

  • Leaked corporate documents to journalists and shared this confidential information with a third-party “governance expert” hired by the board, while refusing to share those same documents and information with shareholders.
  • Launched public attacks on Browning West and imposed costs associated with defending “meritless litigation” in an attempt to deter and silence shareholders from raising their concerns publicly.
  • Signed a “support agreement,” which includes board representation rights for a shareholder who has a conflict of interest due to a significant ownership stake in one of Gildan’s largest customers.
  • “Falsely accused” Browning West of collaborating “improperly” with Chamandy while he was CEO of Gildan.

In the lawsuit, Browning West fears that Gildan will try to delay the annual meeting, where the former plans to offer a slate of candidates to replace eight members of the board.

“Rather than assume accountability for its value-destructive decisions, we believe that the board continues to take oppressive actions against shareholders, demonstrating that its priority is self-preservation,” say Usman Nabi and Peter Lee, co-founders of Browning West.

Chamandy, who claims he was “terminated without cause,” previously told Fashion Network that “shareholders should decide the future if they’re not happy with the CEO. The process was flawed, and they didn’t really have a very good plan.”

Gildan’s Criticism Of Chamandy

In January, the Gildan board issued an open letter to shareholders, “setting the record straight” regarding the motivation behind terminating Chamandy.

  • In this open letter, the board called Chamandy “disengaged,” “unstructured” and having “no credible long-term strategy and no vision for the future.”
  • It also accused him of being focused on outside personal pursuits – including the development of a golf resort in Barbados – and said retaining Chamandy would have “jeopardized the future of Gildan and destroyed shareholder value.”

To bolster its case, the Gildan board has submitted details in support of its decision and sought a third-party assessment of its governance.

  • Gildan’s board has released a timeline, beginning with a 2021 succession plan, that reportedly shows that Chamandy, despite the plan, had “no intention of leaving.”
  • The board retained Dr. Richard W. Leblanc, a Canadian expert on corporate governance and accountability, to produce a report analyzing its succession-planning process.


Antitrust Allegations Toward Browning West

Gildan has since accused Browning West of violating U.S. antitrust laws when purchasing Gildan shares at the end of 2023.

  • According to Gildan, Browning West didn’t notify the U.S. Federal Trade Commission and U.S. Department of Justice about the acquisition of voting securities while failing to comply with the mandatory 30-day waiting period.

“Browning West’s rapid and illegal share acquisitions were undertaken as a necessary part of its scheme to take control of the company and its board and reinstall Mr. Chamandy,” Gildan’s statement reads.

Browning West has stated that it didn’t breach any antitrust violations because it’s exempt from filing and waiting period requirements.

Browning West immediately responded to these allegations in yet another letter to shareholders, describing them as “Gildan Activewear’s efforts to deprive shareholders of an opportunity to reconstitute the board.”