Brooks Brothers files for Chapter 11 protection
‘To Support Value-Maximizing Sale Process and Obtain New Financing‘
SAN JUAN – Brooks Brothers, which claims to be “America’s oldest apparel company,” announced Wednesday that it voluntarily filed for Chapter 11 bankruptcy protection to facilitate a sale process.
Since its founding 202 years ago in New York, Brooks Brothers has become a renowned retailer with 200 stores in North America and 500 in 45 countries. It said it will “close approximately 51” stores in the United States.
The company said a “transaction would ensure that the iconic” brand continues “serving its loyal customers for years to come.”
The company said it has secured commitments for a debtor-in-possession (DIP) financing, subject to court approval, of $75 million from WHP Global, a brand management firm that owns Anne Klein and Joseph Abboud brands.
“This capital, together with cash flows from ongoing operations, will provide liquidity to support the Company through the sale process. This includes honoring certain employee-related wages and benefits obligations, paying claims of certain critical vendors and suppliers, and ensuring the continuation of other operations in the ordinary course of business with as minimal interruption as possible,” according to the retailer’s press release.
“For over 200 years, Brooks Brothers has remained resilient, navigating evolving fashion trends, fluctuating economic cycles, and even world wars,” said Claudio Del Vecchio, chairman and CEO. “Our long history is a testament to the strength of our brand and our mission since 1818: serving customers through innovation, fine quality, personal service, and exceptional value.”
Del Vecchio added: “Our priority is to start this important chapter with a new owner that has appreciation for the Brooks Brothers legacy, a vision for its future, and aligns with our core values and culture. Prior to COVID-19, we were already conducting an evaluation of various strategic options to position the Company for future success in a rapidly transforming retail environment, including a potential sale of the business. Industry headwinds were only intensified by the pandemic. Seeking protection to facilitate an efficient sale of the business is the best next step for the Company to achieve its goals, over any other alternative.”
The number of retail sector bankruptcies have reportedly risen since last year, when Barneys of New York also filed for protection, and now others join after Covid-19 halted sales and worsened their financial situations, such as Neiman Marcus, J.Crew and J.C. Penney.
Details on the Sale Process, according to Brooks Brothers:
- The Company will commence a competitive auction where parties can submit qualified bids. Timing details for the process will be made available in the coming days.
- Brooks Brothers expects to complete the sale process in the next few months, pending court approval.
- Brooks Brothers will continue to operate its business in the ordinary course throughout the court and sale process.
Omnichannel Business Update
- The Company will continue to examine reopening stores that have been temporarily closed due to COVID-19, and as local and state public health and government officials allow and as it is economical to do so.
- Prior to the petition date, on account of the COVID-19 pandemic, the Company decided to close approximately 51 Brooks Brothers stores in the United States, and have closed, or are in the process of closing such stores.
- Details on the store closures can be found in the Company’s first day motions, filed publicly with the court.
The company’s restructuring counsel is Weil, Gotshal, & Manges LLP, its restructuring advisor is Ankura Consulting Group and its financial adviser is PJ Solomon L.P.
Court filings and other documents related to the process are available at http://cases.primeclerk.com/brooksbrothers.