Hartmarx sale to British private equity firm approved
Hartmarx Corp., the bankrupt U.S. suitmaker that fought Wells Fargo & Co. to avoid liquidation, won court approval to sell itself to British private-equity firm Emerisque Brands U.K., U.S. Representative Phil Hare said.
The sale to Emerisque and its partner, SKNL North America BV, was approved today by U.S. Bankruptcy Judge Bruce W. Black in Chicago, where Hartmarx is based, Hare said today in an e-mailed statement. Emerisque earlier this month valued the deal at $128.4 million.
Hartmarx this month named London-based Emerisque the so- called stalking-horse bidder at an auction. The sale includes the assumption of $33.5 million in debt, court papers show.
Emerisque plans to keep "many" of Hartmarx's 4,000 workers, it said in a statement before the deal was approved. The private-equity firm said it was the only company that planned to keep Hartmarx operating as a going concern.
"Today's approval of Emerisque's bid to buy Hart Schaffner Marx and the cooperation by Wells Fargo is good news for nearly 4,000 workers, their families, and our economy," Hare, an Illinois Democrat, said in a statement.
Wells Fargo, Hartmarx's biggest creditor, had argued the suitmaker should be liquidated because it defaulted on loans. Illinois Governor Patrick Quinn and lawmakers in Washington urged the bank to support the deal and avoid liquidation, citing the bank's receipt of $25 billion in federal aid.
Wells Fargo's Wachovia unit, acquired in December, is agent for itself and other lenders in the case. The group extended more than $100 million in financing to the company since the 120-year-old maker of Hickey Freeman and Hart Schaffner Marx brands filed for Chapter 11 bankruptcy in January.
Illinois State Treasurer Alexi Giannoulias threatened last month to take away Wells Fargo's management of the state's $8 billion portfolio if the San Francisco-based bank didn't support a sale of Hartmarx.
Wells Fargo was also under pressure from unions and Barney Frank, the House Financial Services Committee chairman, not to close Hartmarx.
Hartmarx and 50 subsidiaries sought Chapter 11 protection Jan. 23 amid a group of retail industry bankruptcies brought on by a tight credit market, rising unemployment and the recession. The company also blamed changing fashion trends.
Hartmarx listed assets of $483 million and debt of $261 million as of Oct. 9. The company said it owed $113.5 million to banks that gave it bankruptcy financing.
The case is In Re Hartmarx Corp., 09-02046, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).