The protracted, complicated purchase of Hartmarx is finally a done deal.
Emerisque Brands U.K. Ltd. and SKNL North America B.V. breathed a sigh of relief Friday as they completed the acquisition of the assets of bankrupt Hartmarx Corp. And Hartmarx employees, or at least the majority of them, now can look forward to holding onto their jobs.
The assets of Hartmarx are now under the newly formed company Hartmarx Operating Co. LLC.
“We are delighted to have completed this acquisition,” said Nitin Kasliwal, chairman of SKNL, who on Friday was named to the same post at the new Hartmarx. “This is an important step forward towards our ambition of being ‘clothiers to the world.’”
Ajay Khaitan, founder of Emerisque and vice chairman and chief executive officer of the new Hartmarx, said, “We thank our customers, partners and employees for supporting Hartmarx throughout the long and complicated transaction period and want to let them know we are committed to being a strong partner, dedicating the resources and expertise necessary to honor Hartmarx’s heritage and realize its potential.…Although we still face hard work and difficult decisions in the months ahead, we believe that the best days for the company are ahead.”
Following Hartmarx’s Chapter 11 filing by nearly seven months, the deal follows a tough and protracted closing process that took over a month and included many fits and turns.
The buyers had expected to close the deal on Wednesday, but were then taken by surprise by another round of demands from Hartmarx and the professionals in the case seeking additional funds to close the transaction. That had the two buyers suddenly racing against time to get the deal done by the end of the business day on Friday.
Emerisque and SKNL have been hit by snags involving issues concerning demands from the Hartmarx camp, which asserted the buyers be responsible for unexpected, non-contracted-for administrative claims, according to court records. The disputes dealt with whether those claims should be paid by the purchaser or are really the responsibility of “Oldco,” as the Hartmarx estate was sometimes referred to during the winding-down process.
An additional surprise surfaced Friday morning over financial irregularities at Hartmarx in the last few weeks. Sources close to the bankruptcy said Hartmarx failed to make its payroll on Friday. That had the buyers scrambling to find solutions that would enable both a completion of the deal as well as ensuring that, as a separate matter, employees got paid.
Emerisque and SKNL even went to court late Thursday with an emergency request for the Chicago bankruptcy court overseeing Hartmarx to rule on the parties’ respective rights under the purchase agreement.
According to the emergency motion filed by Emerisque and SKNL, and denied by the court, its purpose was to “bring an end to the continued attempts by the debtors to extract further funds from the purchasers not required to be paid under the agreement.”
The document further charged, “The debtors’ attempt to sabotage the sale in hopes of extracting additional consideration from the purchasers is unfounded and disingenuous. The debtors’ estates will retain excluded assets from the sale transaction valued in excess of $18 million, as well as recovery from avoidance actions, from which to satisfy remaining administrative claims that are not otherwise covered by the agreement.”
Sources at the hearing said the motion was denied because the dispute concerned negotiations between parties rather than matters within the purview of the court.
The purchasers tried for the past month to close the deal as soon as possible to avoid losses to the value of the Hartmarx assets as well as keep workers employed. The original close date was July 7.
A court transcript showed that in July, just to get the deal completed, Emerisque and SKNL even agreed to up the $128.4 million offer, which includes liabilities, by $2.3 million to take care of unanticipated administrative claims that weren’t contemplated in the court-approved purchase agreement. That was before a new set of demands for more funds was produced Wednesday, the day the buyers had planned to close on the deal.
There was palpable fear last week that, if the transaction couldn’t be completed by Friday, Hartmarx would be liquidated, resulting in job losses.
Sources said Emerisque and SKNL in recent days uncovered additional irregularities in Hartmarx’s cash accounts, which required the purchasers to provide additional guarantees to lenders to maintain funding to keep the Hartmarx operations going. However, due to the possible impact those irregularities have on operations, there’s now still a chance job cuts will have to be deeper than initially expected. That’s because there’s likely little or no money left from Oldco to fund its obligations, which include payroll and benefits to employees of the new company.
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)
Not only does #TheProfit return to CNBC tonight, but @marcuslemonis has launched @shopmarcus, a new shopping and lifestyle retail experience in Aspen and Chicago, with more locations to come. The retail stores offer in-store stylists and a variety of contemporary womenswear selections.
“It’s life, I’m going to face it,” @mingxi11 sighed. “I fell, but you know, I think the most important thing is that I get back up. I had the love, the help from my sister — the girl next to me Gizele [Oliveira] — she’s so nice. When I went backstage everybody was trying to comfort me like ‘Oh Ming, it’s OK.’ I’m really, really touched. I think it’s them who gave me the courage to go back on stage for the finale,” Xi told WWD of her fall at the @victoriassecret fashion show. (📷: David Fisher) #wwdfashion #vsfashionshow #victoriassecret
@louisvuitton tapped @therealpeterlindbergh for its latest city-centric photo book, which is part of a series called Fashion Eye. The primarily black and white book captures the spirit of Berlin in 57 images shot between 1989 and 2019. “Berlin is an inspiration for me, more than a city. I mean @millajovovich is simply Berlin!” said Lindbergh. #wwdfashion
“You know, I think audiences expect a certain performance so I have to deliver to them what they’re expecting to a certain degree. But I’m also a different actor and a different person, I have my own spin on the character,” says @noahegalvin of his takeover of the leading role in “Dear Evan Hansen” following the departure of @bensplatt, who originated the role. Read WWD’s interview with the 23-year-old actor on WWD.com #wwdeye (📷: @jilliansollazzo)
For pre-fall 2018, @etro created richly-colored wonderland, using tapestries, textiles and wallpapers from the Eastern world at large. The line featured floral and graphic prints and jacquard motifs, like this two-piece look featured here. #wwdfashion (📷: Giovanna Pavesi)
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)