By  on August 7, 2009

Emerisque Brands U.K. Ltd and SKNL North America, BV are today in a race against time, trying to close their purchase of bankrupt Hartmarx Corp by the end of the business day.

The two have been hit by snags involving issues concerning demands from Hartmarx and the professionals in the case that the buyers be responsible for unexpected, non-contracted for administrative claims, according to court records. The disputes deal with whether those claims should be paid by the purchaser or are really the responsibility of "Oldco," as the Hartmarx estate is sometimes referred to during the winding down process.

The latest bone of contention Friday morning has to do with recently discovered financial irregularities at Hartmarx in the last few weeks.

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.

The court declined, according to sources at the hearing, because the issues seemed to concern negotiations between parties.

Sources also said Emerisque and SKNL have been trying to close the deal as soon as possible to avoid losses to the value of the Hartmarx assets as well as keep workers employed.

Now the fear is if the transaction can't be completed, there will need to be a liquidation of the firm.

In what may be the final straw to break the deal, sources said that Emerisque and SKNL in recent days have uncovered additional irregularities in Hartmarx's cash accounts, which have required the purchasers to provide additional guarantees to lenders to maintain funding in order to keep the Hartmarx operations going. However, due to the possible impact those irregularities have on operations, there's a chance job cuts will have to be deeper than initially expected. That's because there'll be little or no money left from Oldco to fund its obligations including payroll and benefits to employees of the new company that's set up should the transaction get done today.

For complete coverage, see Monday's WWD.

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