WWD.com/business-news/executive-changes/joseph-abboud-exits-hmx-6491657/
government-trade
government-trade

New Bidders Eye HMX; Joseph Abboud Resigns

There are at least 10 potential bidders for the the bankrupt company, even though the president and chief creative director has stepped down.

Joseph Abboud.

There are at least 10 potential bidders for the bankrupt HMX Group, even though president and chief creative director Joseph Abboud has stepped down.

Since the so-called data room became operational a month ago, there have been interested bidders downloading information for their due diligence on HMX. According to sources, some are firms that have been kicking the proverbial tires since trying to get the stalking-horse bid that went to Authentic Brands Group, and others are new firms taking an interest in the bankrupt assets. Any firm wishing to outbid Authentic Brands in a court-approved auction on Dec. 10 will have to pay more than $72.3 million if it wants to get control of HMX.

Among the new potential bidders are Ron Burkle’s Yucaipa Cos. and Wilbur L. Ross’ WL Ross & Co. But just because the 10 firms are doing their analysis of HMX’s financial operations, that does not mean they all will actually bid for the bankrupt firm or any component of its assets.

As reported last month, Yucaipa signed a confidentiality agreement and is interested in bidding for all of HMX’s assets, including the North American factories. The firm is proceeding with the process and is contemplating different options regarding the structure of a potential bid, said sources familiar with the due-diligence process. Los Angeles-based Yucaipa was founded by Burkle in 1986 and has stakes in Sean John, Zac Posen, luxury jeweler Garrard & Co., London jeweler Stephen Webster and specialty retailer Scoop. A spokesman for Yucaipa declined comment.

RELATED STORY: Yucaipa Cos. Plots Bid for Ailing HMX Group >>

Ross, chairman and chief executive officer of WL Ross & Co., said, “We have great respect for some of the brand names that HMX has, but we really don’t comment on potential acquisitions.”

Ross, whose specialty is buying firms in distressed situations, restructured the U.S. textile industry in 2004 when he combined Burlington Industries and Cone Mills — both acquired out of bankruptcy — to form International Textile Group.

While it wasn’t immediately clear what HMX assets his firm was eyeing, sources familiar with the due diligence process said it was likely the entire firm. That would make both WL Ross and Yucaipa, who are also joint investors in the nation’s only union-owned bank, Amalgamated Bank, competitors this time around.

Other firms said to be still eyeing individual assets of HMX are private equity company Bluestar Alliance, Spencer Hays’ Individualized Apparel Group and Montreal-based tailored-clothing brand Samuelsohn Ltd.

Sources familiar with the due-diligence process said that in HMX company presentations to bidders that have been under way in the last 30 days, the company had disclosed the resignation of Abboud on Oct. 31. His departure hasn’t deterred would-be buyers, however.

Perhaps that’s because Abboud will continue to provide consulting services to the company as it works through the Chapter 11 restructuring process.

Responding to market reports, Doug Williams, ceo of HMX, told WWD Friday: “Joseph has decided to take a step back from the day-to-day duties but will stay on as a creative adviser to the company.”

Williams said Abboud has reached “a stage in his life where he wants to work on other projects. We made the decision together, and we remain great partners.”

Since joining HMX in early 2010, Abboud has revamped and upgraded the company’s brands, including its core Hickey Freeman and Hart Schaffner Marx labels. He has also worked on a variety of other projects, including a special 125th anniversary collection for HSM, the relaunch of Palm Beach, the Argyle Culture licensed brand from Russell Simmons, and the Reid & Taylor apparel collection from HMX’s parent, S. Kumars Nationwide Ltd., which never came to market.

Williams said Abboud has “groomed our two heads of design,” who will continue to work on the brands’ offerings. They are Dominick Paci, head of sportswear, and John Morales, who oversees tailored clothing, both of whom will remain with the company, Williams said.

Reached by phone Friday, Abboud said: “I truly loved what I was doing, but there are a lot of other things I want to do.” He said he’s been contemplating stepping aside for the past six months, even before the bankruptcy filing. “I think the company will come out of this, but I’m looking at other horizons,” he said.

He hinted that he is close to revealing a new association with another company but said the final details have yet to be worked out.

Separately on Friday, Individualized Apparel Group received Manhattan bankruptcy court approval to acquire, for $3.5 million, substantially all of the assets of Coppley Corp., the Canadian custom-clothing manufacturer owned by the bankrupt HMX Group. The Canadian operation is not part of the HMX bankruptcy filing last month.

In addition, a creditor’s committee has been formed and Noel Beasley, president of the union Workers United, has secured a decision-making role on the committee through representation by the National Health Fund. NHF is the union that represents health-care benefits for union workers at HMX’s factories in Chicago and Rochester, N.Y.

RELATED STORY: Union Sets Effort to Save HMX Factory Jobs >>