Hartmarx accepts $85.5 million ' stalking horse' bid

The jobs of roughly 600 workers at Hart Schaffner & Marx's Des Plaines factory aren't secure yet but their prospects look a lot brighter after company leaders chose a buyer that could bring the suitmaker out of bankruptcy.

Hartmarx Corp., maker of high-end suits most notably worn by President Barack Obama during his inauguration, said Friday it has signed an agreement to sell all its assets for about $85.5 million to "stalking horse" bidders, London-based Emerisque Brands and SKNL North America BV.

Stalking horse bidders make an initial offer that will only be accepted if other higher bids do not emerge. The deal is subject to a competitive auction in bankruptcy court.

Hartmarx filed motions late Thursday with the Bankruptcy Court for the Northern District of Illinois for a speedy sale of assets.

The executive board of Workers United, the union representing roughly 1,000 Hartmarx workers in Illinois, discussed the Emerisque bid with Des Plaines factory workers Friday.

"This was greeted as a positive development," Workers United Treasurer Joe Costigan said. "It means that the process can go forward. We're going to remain optimistic but also on guard. We're not going to be satisfied in this struggle until the judge (pounds) the gavel and the company is sold, and the bankruptcy is completed."

Union officials favor the company's sale to Emerisque because it would keep the business intact. Previous bidders have proposed liquidation or giving up parts of the business, such as Hartmarx's women's wear product line.

"There's probably some structural changes that (Emerisque) would envision," Costigan said. "We don't know what that would be at this point."

Hartmarx Corp., a 122-year-old company, operates manufacturing plants in Des Plaines and Rock Island, as well as a warehouse in Indiana, and has facilities employing nearly 3,000 people nationwide.

Hartmarx sells business attire as well as casual and golf clothes. Its brands include Hickey-Freeman, Palm Beach, Naturalife, b. chill and others.

The company filed for Chapter 11 bankruptcy protection on Jan. 23 and owes more than $114 million to creditors. Its primary lender is Wells Fargo, which also must weigh in on any potential buyer.

A Wells Fargo spokeswoman declined to comment Friday.

Des Plaines 6th Ward Alderman Mark Walsten said he hopes pressure from local, state and federal officials will force Wells Fargo to keep Hartmarx operating.

"It would be fantastic news, if (the Emerisque deal) comes through," Walsten said. "I couldn't be more happier than to keep these people employed and to keep as much business and industry in Des Plaines as possible."

Emerisque and SKNL propose paying $70.5 million in cash and $15 million in the form of a junior secured note. They also propose to assume certain liabilities worth about $33.5 million.

Hartmarx Chairman and CEO Homi Patel said in a news release the deal was the "best and highest" the company had received. He added the suitmaker needs continued support from lenders and other stakeholders.

The Des Plaines factory will shut down for two weeks after Memorial Day weekend for employees' vacations, and two more weeks afterward when some workers will be laid off as part of a seasonal transition.

• Daily Herald wire services contributed to this report.

<div class="infoBox"> <h1>More Coverage</h1> <div class="infoBoxContent"> <div class="infoArea"> <h2>Video</h2> <ul class="video"> <li><a href="/multimedia/?category=9&type=video&item=342">Protest at Des Plaines business</a></li> </ul> <h2>Stories</h2> <ul class="links"> <li><a href="/story/?id=291983">State official threatens bank in suitmaker's bankruptcy <span class="date">[05/07/09]</span></a></li> <li><a href="/story/?id=291557">Suitmaker's employees take plea to president <span class="date">[05/06/09]</span></a></li> </ul> <h2>Related documents</h2> <ul class="morePdf"> <li><a href="/pdf/wellsfargo.pdf">Letter from State Treasurer Alexi Giannoulias to Wells Fargo</a></li> <li><a href="/pdf/obamahsm.pdf">Obama: A fashion role model </a></li> </ul> <h2>Related links</h2> <ul class="moreWeb"> <li><a href="http://www.hartmarx.com/history.htm">Company history </a></li> </ul> </div> </div> </div>