Lender rejects Emerisque's offer for Hartmarx

A week ago, things were looking up for employees of Des Plaines-based Hart Schaffner & Marx, maker of high-end suits favored by President Barack Obama.

Company officials had agreed to sell Hartmarx assets to London's Emerisque Brands/SKNL North America B.V. in a deal that could have helped the 122-year-old suitmaker stave off bankruptcy. The company, which filed for Chapter 11 protection in January, owes creditors more than $114 million.

Things took a downturn Friday when Hartmarx's primary lender, Wells Fargo & Co., derailed the deal by rejecting Emerisque's offer.

Wells Fargo officials, in a prepared statement, said Friday the bank opposed the deal because "Emerisque fails to provide adequate value to Hartmarx's lenders" and "also because Emerisque's offer does not ensure that Emerisque will continue running Hartmarx's business operations after the acquisition."

The Wells Fargo statement also indicates Emerisque would sell "significant pieces" of Hartmarx, including factories in downstate Rock Island and Cape Girardeau, Missouri, and that Emerisque is "unwilling to assume Hartmarx's obligations to its employees" with regard to health care benefits, retirement, workers' compensation and union contract obligations.

Joseph Costigan, an official with Workers United, the union representing Hartmarx's approximately 1,000 Illinois workers, calls Wells Fargo's statement a "distortion of facts." He said the Cape Girardeau plant has already closed and that Emerisque officials never indicated that the Rock Island plant was in any danger.

"Their statement is disingenuous," said Costigan. "It reiterates what we've been saying all along, that Wells Fargo's only mission here is to force the liquidation" of Hartmarx.

Furthermore, it reveals "the disregard that Wells Fargo has for preserving jobs while they continue to reap the benefits of having received $25 billion in U.S. funds from taxpayers through TARP" (Troubled Asset Relief Program), Costigan said.

As for the collective bargaining agreement, Costigan said the union and Emerisque may have issues to address, but that Emerisque agreed to "assume the collective bargaining agreement and execute a new agreement on mutually acceptable terms."

In a prepared statement, Emerisque officials stated they remained "unwavering" in their commitment to "preserving good union jobs" and denied they intend to de-unionize the company. The company and union will pursue the matter in Bankruptcy Court on Monday.

Des Plaines Mayor Martin J. Moylan said, "We feel that Wells Fargo should do the right thing and accept the bid from Emerisque," adding that a company closure would have devastating effects on its employees, the city and the state as a whole.