A group of 500 Hart Schaffner Marx workers held a rally at the brand’s factory near Chicago on Monday and voted to stage a sit-in if Wells Fargo-Wachovia or a potential buyer tries to begin liquidating its parent, the bankrupt Hartmarx Corp.
This story first appeared in the May 12, 2009 issue of WWD. Subscribe Today.
The workers were joined by lawmakers and union and state leaders in a bid to pressure Wells Fargo, which controls $100 million of Hartmarx’s $160 million debtor-in-possession credit line, to allow the company to stay afloat and give bidders a chance to purchase the historic men’s clothing firm, which outfitted President Obama throughout his election and the inauguration.
Hartmarx, which filed for Chapter 11 bankruptcy protection in late January, is said to have drawn down at least $100 million of the DIP facility by early April. Wells Fargo, a recipient of $25 billion of the government’s Troubled Assets Relief Program funds, is facing pressure to get repaid on its loan and is said to be determining whether to extend the credit facility.
“The vote today says Hartmarx workers are going to hold banks accountable for how they spend taxpayers’ money and how they contribute to the future of our economy,” said Noel Beasley, director of the Chicago-Midwest regional joint board and executive vice president of Workers United, the union that represents Hartmarx workers.
Wells Fargo has come under fire from union leaders and at least two Capitol Hill lawmakers who are angry the financial institution received government bailout money and is reportedly threatening to pull financing and liquidate an American clothing company with deep roots that employs 3,500 workers across the nation.
But Wells Fargo shot back Monday. “Wells Fargo empathizes with the employees and communities affected by the decisions made by Hartmarx,” the company said. “We believe these are internal business matters which Hartmarx must resolve for itself as it explores its options in a very difficult economy.
“Unfortunately, Hartmarx has been in default of its loan obligations to banks in the group that have [sic] provided it credit, including Wachovia Capital Finance, part of Wells Fargo,” the statement continued. “Nevertheless, we have continued to finance the operations of Hartmarx, both before and after the Chapter 11 filing, even though it is now apparent that Hartmarx is unable to repay more than $114 million, which it owes the bank group.”
Rep. Phil Hare (D., Ill.), who for 13 years worked as a cutter in a Hart Shaffner Marx factory in the district he now represents, implored Wells Fargo, “At this point, we are not even asking you to extend the line of credit Hartmarx so desperately needs. All we’re asking is for you to keep this great company in business. You have the power to do that. Accept a bid that will keep Hartmarx intact and save thousands of jobs. Allow these workers to continue supporting their families. American taxpayers bailed you out in your time of need. It is time to return the favor.”
Illinois State Treasurer Alexi Giannoulias reiterated an earlier pledge: “Unless the company remains open, [Wells Fargo] will not be doing business with the state of Illinois any longer.”