Well Fargo, Hartmarx in court over proposed sale
A judge has scheduled a hearing in the Chapter 11 bankruptcy protection case of the Chicago-based company that's made suits for President Barack Obama.
Representatives from Hartmarx Corp. and its largest creditor, Wells Fargo, are expected in federal court in Chicago on Monday.
Last week, Hartmarx employees protested when Wells Fargo rejected a bid for the suit-maker. The bank says Emerisque Brands U.K. Limited and SKNL North America BV's $85.5 million offer is too low.
Wells Fargo has pushed to liquidate the 120-year-old Hartmarx because it hasn't been able to repay $114 million.
Hartmarx made the suit Obama wore on Election Night and the suit and tuxedo he wore on Inauguration Day. The company has 3,000 employees.
In Wells Fargo & Co.'s objection to the proposed sale of bankrupt suitmaker Hartmarx Corp. to a U.K. private-equity firm, the lender argued the $86.5 million offer won't generate enough cash to pay secured debt.
The cash portion of the bid by Emerisque Brands U.K. Ltd. will probably end up being "significantly less" than the $70.5 million stated in the sale agreement, Wells Fargo's Wachovia unit said May 29 in U.S. Bankruptcy Court in Chicago, where Hartmarx is based.
"There is no limit as to how low the cash portion of the purchase price may be adjusted," San Francisco-based Wells Fargo, the agent for itself and other lenders, said in the objection. The "lenders do not accept and will not consent to the terms" of the offer, it said.
Hartmarx asked a judge May 21 to name London-based Emerisque and SKNL North America BV the so-called stalking-horse bidder at a June 30 auction. Illinois Governor Patrick Quinn and lawmakers in Washington urged the bank to support the deal and avoid liquidating the clothier, citing Wells Fargo's receipt of $25 billion in federal aid.
Wells Fargo acquired Wachovia, based in Charlotte, North Carolina, in December. The Hartmarx lenders it represents have extended more than $100 million in financing the company since the 120-year-old maker of Hickey Freeman and Hart Schaffner Marx brands filed for Chapter 11 bankruptcy in January.
Hartmarx said the offer includes $70.5 million in cash and a secured note worth $15 million. Under the deal, Emerisque would assume debt of about $33.5 million, it said. The auction results would need approval by Judge Bruce W. Black after a July 9 hearing.
The case is In Re Hartmarx Corp., 09-02046, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).