Progress Illinois

Since Wednesday, we've been writing about the substantial bid from Emerisque, a London-based private equity firm, to buy bankrupt clothier Hartmarx, Inc. (get the backstory here).  The bidder has indicated that it would like to keep the company intact, saving over 3,000 jobs nationwide and 1,000 here in Illinois.  It appeared yesterday that the Hartmarx board was in favor of the offer.  But now comes this report from the New York Times' Steven Greenhouse:

[O]fficials close to the bankruptcy negotiations said Thursday that executives from Wells Fargo, Hartmarx’s main creditor and the provider of its operating funds while it is in bankruptcy, threatened to cut off future credit, perhaps preventing Hartmarx from making payroll, if its board chose Emerisque.

The threat increased fears that the bank favored liquidation.

It's amazing that Wells Fargo is resisting this bid, which offers them over $100 million (about 80 cents on the dollar for the debt owed to them by Hartmarx).  Would they get a larger return via liquidation?  Very unlikely.

So what's their play? Well, we know they've expressed frustration with the Troubled Asset Relief Program (TARP) in the past, even trying to return the $25 billion they received last year.  So they may be looking for a fight with labor, Democrats in Congress, and the White House (who has so far stayed quiet on this particular dispute).  Stay tuned.