Hartmarx to sell idle Michigan City plant
Hartmarx Corp., the Chicago-based men's suit maker that sold the business in August, will undertake the sale of a former distribution facility in Michigan City, Indiana, so long as the secured lender GE Commercial Finance Business Property Corp. covers expenses and gives up a portion of the sale proceeds.
Hartmarx has operations in Des Plaines.
Hartmarx decided that the sale of the facility won't command a price sufficient to cover the $5 million mortgage held by GECC. The company wasn't inclined to undertake the expense of marketing the plant without a give-up by GECC.
At a Dec. 17 hearing, Hartmarx will seek approval of an agreement where GECC will give Hartmarx the greater of $200,000 or 7 percent of the net proceeds of sale. If the eventual price covers the debt fully, Hartmarx will receive the excess plus the 7 percent.
The Michigan City facility wasn't among the assets acquired by the purchaser.
At the Dec. 17 hearing, Hartmarx will also pursue a three- month extension, until March 22, of the exclusive right to propose a liquidating Chapter 11 plan. The company has agreed that the official creditors' committee may file a plan if there is a bona fide disagreement over its terms.
The Dec. 17 hearing is also when GECC will ask the bankruptcy judge to excuse the late filing of a $5.55 million secured claim. GECC says it made other filings that amount to an informal claim.
The bankruptcy judge in June authorized the sale of the business to Emerisque Brands U.K. Ltd. and SKNL North America Ltd. under a $119 million contract that included $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. The petition listed assets of $483 million and debt totaling $261 million as of Oct. 9. 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 of Illinois (Chicago).