Hartmarx Corp., which makes the Jack Nicklaus, Bobby Jones and Lyle & Scott golf apparel collections, filed for Chapter 11 protection in an Illinois federal bankruptcy court, citing a “substantial decline” in sales to consumers and retailers as well as liquidity pressures. The 137-year-old company's primary business is making tailored clothing under such names as Hickey-Freeman and Hart Schaffner & Marx.
The Chicago-based company said existing lenders agreed to provide up to $160 million in debtor-in-possession financing to allow it to keep operating as it reorganizes. However, the company said it might consider selling some or all of its assets.
In recent years, Hartmarx has struggled as casual dressing eclipsed the need for suits. Tight credit markets and a retreat in consumer spending, especially for luxury clothing, dealt the company its latest blow.
What finally pushed the company into bankruptcy was Wachovias tightening of Hartmarxs ability to borrow from its $200 million credit line against its receivables.
By Jan. 13, the bank informed Hartmarx that its credit line exceeded its borrowing base by more than $7 million, leaving the company essentially unable to finance its day-to-day operations.
“We believe that todays filing and our D.I.P. financing provide us with sufficient funding and allows us to operate our business currently as we pursue strategic alternatives,” Homi Patel, Hartmarxs chairman and chief executive, said in a statement.
