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.