Progress Illinois

In his article on the ongoing Hartmarx saga last night, the New York Times' Steven Greenhouse suggested that the bankrupt clothier's main creditor, Wells Fargo, has been trying to prevent the company's board from selecting Emerisque, a British private equity firm, as its favored bidder.  Specifically, he reported that Wells Fargo has "threatened to cut off future credit, perhaps preventing Hartmarx from making payroll, if its board chose Emerisque." 

Well, the board went on to officially choose Emerisque, but that doesn't necessarily mean Wells Fargo has acquiesced. A press release sent out by the company today described the bid as the "best and highest offer we have received," but added: "[W]e will need continuing lender and other stakeholder support to meet the significant challenges of closing this or any alternative transaction."  More details on the Emerisque offer:

Under the terms of the agreement, which is subject to court approval and certain other closing conditions, the buyer [Emerisque] will acquire substantially all of the assets for $70.5 million in cash and a Junior Secured Note with a face value of $15.0 million, subject to adjustment as of the closing date for changes in the company's borrowing base. The buyer has also agreed to assume certain liabilities of Hartmarx estimated to total approximately $33.5 million. 

Hartmarx is seeking approval from the bankruptcy court today to begin the auction process. We should have a better idea of where this is heading after that hearing concludes.