Tailored Brands Inc. received bankruptcy court approval late Monday on its $500 million in debtor-in-possession financing along with its other motions following its Chapter 11 filing on Aug. 2.
At a three-hour-plus first-day hearing in front of Judge Marvin Isgur from the U.S. Bankruptcy Court for the Southern District of Texas, the court granted interim approval of the financing package provided by its existing revolving credit facility lenders and allowed the retailer to access the cash collateral of existing revolving credit facility lenders and term-loan lenders. Isgur also authorized the company to continue to pay employees, provide preexisting health and welfare benefits, honor customer gift cards, rental reservations and custom clothing orders, maintain existing loyalty programs and pay vendor partners.
But the proceeding was not without its drama. Isgur kept pushing back at the company’s legal team over the terms of the DIP financing, saying the initial terms of the “roll-up,” the portion of the DIP financing the company would use to pay off its pre-bankruptcy secured loans, was not fair to unsecured creditors. He said he was not prepared to approve a deal where creditors were not fairly represented “on Day One,” before a creditors committee was even formed. But after two breaks, and an adjustment in the language in the motion, Isgur granted his approval.
“I want to get the money to the company tonight,” he said. Isgur also spoke directly to Tailored Brands president and chief executive officer Dinesh Lathi during the hearing, saying the length and contentious manner of the first-day hearing was unusual and the “fighting between your lawyers and the judge is not how it usually goes.” He said the remainder of the hearings would probably go more smoothly.
“The court’s prompt approval of our first-day motions is a clear step forward that enables us to serve our customers, take care of our team and meet our go-forward financial commitments as we work to achieve our financial goals,” Lathi said in a statement following the hearing. “The approval of these motions is an important milestone on our path to positioning our brands to better compete and succeed in today’s retail environment and beyond. We appreciate the continued support of our senior lenders — and all of our stakeholders — during this process and look forward to moving swiftly ahead.”
During the hearing, the company said it is hoping to exit the Chapter 11 proceedings by Dec. 1 or earlier.
In addition, the company said in a Securities and Exchange Commission filing on Tuesday that it has received notice that its stock will be delisted from the New York Stock Exchange as a result of the Chapter 11 filing. Tailored Brands said it would not contest the delisting.
As reported, the men’s wear retailer filed Chapter 11 Sunday night, the latest victim of the coronavirus. The company’s situation was exacerbated by its dependence on tailored clothing and the debt load it had accumulated by its $1.8 billion acquisition of Jos. A. Bank Clothiers in 2014. It has already said it would close some 500 of its 1,400 stores and trim 20 percent of its workforce.