Brooks Brothers files for bankruptcy

Storied retailer has secured financial lifelines as it seeks sale

National /
Jul.July 08, 2020 10:05 AM
Brooks Brothers CEO Claudio Del Vecchio (Getty)

Brooks Brothers CEO Claudio Del Vecchio (Getty)

Brooks Brothers, which has 500 stores across the globe, filed for Chapter 11 bankruptcy protection Wednesday. The move had been expected as the 200-year-old clothing chain struggled first with a shift from a formal dress code in the workplace to a more casual one, and then ultimately the coronavirus.

Brooks Brothers will use the bankruptcy process to find a buyer for the business, the Wall Street Journal reported. The company has a $75 million debtor-in-possession loan from WHP Global, which gives the lender a senior lien on Brooks Brothers’ assets, according to the newspaper.

WHP Global is a brand-management firm backed by Oaktree Capital and BlackRock – two private equity firms that have large war chests to buy distressed companies in the wake of the virus pandemic.

Brooks also received a $20 million loan from inventory liquidator Gordon Brothers. The loan, however, is from Gordon’s financing arm – a separate division from the side that handles liquidations, according to the Journal.

Brooks Brothers listed assets and liabilities between $500 million and $1 billion.

The closely held company is owned by Italian businessman Claudio Del Vecchio, who bought the company in 2001 and oversaw an expansion from one international market to a presence in 70 countries today. The company has about 200 stores in North America and three U.S. factories. It warned employees in June that it could shut those factories down.

Potential suitors include the brand manager Authentic Brands Group, which is teaming up with Simon Property Group in an attempt to buy the retailer. [WSJ] — Rich Bockmann

 

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