Judge: Hartmarx can settle claims against lenders

The bankruptcy judge in Chicago yesterday gave Hartmarx Corp. approval for a settlement with secured lenders that will bring in $750,000 cash while releasing $2.25 million being held aside for professional fees.

Hartmarx is based in Chicago and has operations in Des Plaines.

The creditors' committee had sued Wachovia Capital Finance Corp., as agent for the lenders, alleging that the banks' lien didn't reach $12 million generated from ending a lease in New York. The bankruptcy judge in June 2009 authorized the sale of the business to Emerisque Brands U.K. Ltd. and SKNL North America Ltd. for $119 million, including $70.5 million cash, the assumption of $33.5 million in debt, and a junior secured note for $15 million.

Hartmarx filed under Chapter 11 in January 2009, listing assets of $483 million and debt totaling $261 million as of October 2008. Debt at filing included $114 million on a revolving credit, $15.5 million in industrial revenue bonds, $12 million in mortgages, and $70 million owing to trade suppliers. Manufacturing was performed in the company's own facilities and by contractors. The brand names included Hart Schaffner Marx and Hickey Freeman.

The case is In re XMH Corp., 09-02046, U.S. District Court, Northern District Illinois (Chicago).