Hartmarx settles with lenders for $750,000 cash
The remainder of Hartmarx Corp. negotiated a settlement with secured lenders that will bring in $750,000 cash while releasing $2.25 million being held aside for professional fees.
The Hartmarx creditors' committee sued Wachovia Capital Finance Corp. as agent for the lenders, alleging that the banks' lien didn't extend to $12 million generated from ending a lease in New York. There were also claims against Moelis & Co. LLC, the financial advisers for Hartmarx.
Under the settlement, Moelis will pay $150,000 of the $750,000 cash payment. There will also be a waiver of $2 million in claims against the Hartmarx bankrupt estate.
A hearing to approve the settlement is scheduled for June 7.
Any creditor will be entitled to file a Chapter 11 plan after July 23, when the former Chicago-based men's suit maker will have been in reorganization for 18 months. The creditors' committee already won the right to file a plan if it wishes. The company also has operations in Des Plaines.
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).