The bankrupt US suit-maker Hartmarx Corporation, whose clientele includes US President Barack Obama, is likely to be revived under a new Indian owner, S Kumars Nationwide. The textile firm is close to acquiring Hartmarx Corporation, along with London-based private equity firm Emerisque Brands for a total amount of $119 million.
Hartmarx Corporation, in a statement on May 22, said it had entered into a "stalking horse" asset purchase agreement with Emerisque Brands UK Ltd and SKNL North America, an arm of S Kumars Nationwide, for all assets of Hartmarx.
A stalking horse bid is an attempt by a debtor to maximise the value of its assets as part of or before a bankruptcy court-approved auction process.
The American clothing company said it had filed motions last Thursday with the Bankruptcy Court for the Northern District of Illinois with the aim of preserving maximum value for all stakeholders.
Under the terms of the agreement, subject to court approval the buyer (S Kumars and Emerisque) will acquire substantially all of the assets for $70.5 million in cash and a junior secured note with a face value of $15 million.
Also, it has agreed to assume certain liabilities of Hartmarx, estimated to be about $33.5 million. "We are very pleased to have taken this first, yet very important, step in resolving the future of Hartmarx as a continuing enterprise. In this challenging economic environment, at the present time the Emerisque offer is the best and highest offer we have received...," Hartmarx Chairman and Chief Executive Officer Homi B Patel said.
On January 23, Hartmarx Corporation and 50 of its wholly-owned US subsidiaries filed voluntary petitions for protection under chapter 11 of the United States Bankruptcy Code.Meanwhile, as per a report by the Chicago Tribune, "The purchase agreement sets the bid floor for a potential auction of Chicago-based Hartmarx that could come as soon as June 30 and be wrapped up in mid-July."
Hartmarx is the largest maker of men's tailored clothing in the US and made a tuxedo, topcoat and suit that the 47-year-old Obama wore on his inauguration on January 20.
Obama is a regular customer at Hartmarx and wore the apparel maker's suits during his address to the Democratic National Convention in Denver and his historic acceptance speech in Chicago, after he won the Presidential polls on November 4, 2008.