A Chicago-based apparel maker, which makes suits preferred by US president Barack Obama, has filed for bankruptcy.
A Chicago-based apparel maker, which makes suits preferred by US president Barack Obama and has licensing agreements to sell garments in India, has filed for bankruptcy.
The 125-year-old Hartmarx Corporation said "substantial decline" in consumer spending on luxury clothing and a credit crunch impacted its revenues, leading it to file for bankruptcy.
"The filing is principally the result of the substantial decline in discretionary apparel purchases by consumers and by the company's retail customers, particularly at the luxury price points, coupled with the significant contraction in borrowing capacity," it said in a statement on Saturday.
Hartmarx is the largest maker of men's tailored clothing in the US and made a tuxedo, topcoat and suit that the 47-year-old Obama wore on his inauguration on January 20.
Obama is a regular customer at Hartmarx and wore the apparel maker's suits during his address to the Democratic National Convention in Denver and his historic acceptance speech in Chicago after he won the Presidential polls on November 4, 2008.
In recent years, the company also poured resources into the luxury market and built showcase stores to create brand awareness.
It had signed an exclusive license agreement with Arvind Brands, a division of Bangalore's Arvind Mills Ltd in May last year, to design, distribute and retail its brands in India. Arvind had access to Hart Schaffner Marx, Pierre Cardin and Sansabelt brands of men's apparel.
Hartmarx and its domestic US subsidiaries filed for protection under Chapter 11 of the US Bankruptcy Code.
It has arranged USD 160 million from its existing lenders in debtor-in-possession financing to allow it to keep operating as it reorganises and pay vendors for goods and services received after the filing.
The company is also seeking approval of the US Bankruptcy Court to continue operating its business in the ordinary course, including the authority to pay wages and salaries.
The contraction in credit markets has also impacted the company's ability to obtain financing from alternative sources. The company's restructuring plan may include sale of substantially all of its assets.
"The filing provide us with sufficient funding and allows us to operate our business currently as we pursue strategic alternatives."
"We have retained Moelis & Company, LLC as our financial advisor to evaluate strategic and financing alternatives, including the identification of potential parties to invest in or acquire the company," chairman and chief executive officer of Hartmarx, Homi Patel, said.
The company's Canadian and other non-US affiliates are not part of the bankruptcy filing.
Hartmarx produces and markets business, casual and golf apparel under its own brands, including Hart Schaffner Marx, Hickey-Freeman, Palm Beach, Christopher Blue.
It has certain exclusive rights under licensing agreements to market select products under a number of premier brands such as Austin Reed, Burberry men's tailored clothing and Pierre Cardin.
The company's distribution channels include specialty and department stores and retailers.
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