After reports surfaced that The Children's Place (NASDAQ: PLCE) explores a sale earlier this month, the stock surged. Now the company has made it official, hiring Lehman Brothers to explore strategic alternatives, including operational improvements, a recapitalization, or other transactions.

Here's where it gets dicey: The Children's Place has been a train-wreck of late. The stock price has tanked over the past year, the company's auditor has announced it will not stand for re-election because it can't rely on information provided by former CEO Ezrah Dabah, and several shareholder class-action lawsuits are pending against the company.

The rumor is that Dabah, who owns 18% and serves on the board and was fired from the CEO job for failing to comply with company rules regarding insider trading, may be interested in purchasing all or part of the company.

In other words, Mr. Dabah, a big part of the reason the stock is down so much, could stand to benefit from buying it at a fire-sale price. It's a little bit like an employee who set fire to his place of work and then begged the mercy of the court because he was out of a job ... or something.

If Dabah does emerge as a bidder, expect to hear a lot more about Children's Place in the months to come. It could well become the corporate governance freak show of the year.