Despite their differences, both President Barack Obama and his opponent, Mitt Romney, enjoy wearing Hart Shaffner Marx suits, a brand owned by suit company HMX Group. Unfortunately, HMX Group has found itself in financial trouble, having to file for Chapter 11 bankruptcy reorganization for the second time since 2009. While multiple filings through the years aren’t uncommon for bankrupt New York businesses, the filings occurring so closely together indicate a company that’s experiencing serious difficulties.
Chapter 11 reorganization usually allows a company to set its business affairs straight in order to meet its debt obligations. In the case of HMX Group’s latest filing, the company is seeking to sell itself rather than reorganize. No reason was given for the new bankruptcy filing in U.S. Bankruptcy Court in Manhattan, though the 2009 bankruptcy was the result of a decrease in demand for its high-end brands as a result of the recession. A buyer has already made itself known by placing a closed auction bid for the company.
Until the sale is finalized, HMX has secured $65 million from one of its lenders as operating cash. The company reports debts in the range of $50 million to $100 million, with assets of only $50,000.
Chapter 11 business reorganization is a way to restructure the debts that a business owes so that the business can remain operational. It requires close relations with creditors to come up with a plan that both the owners of the company and the creditor can agree to. HMX has shown that restructuring can go to extreme lengths, even leading to the actual sale of the company while bankruptcy protection prevents creditors from disrupting both normal operations as well as the sales process itself.
Source: The Wall Street Journal, “Suit Maker HMX Group Files for Chapter 11 Again,” Stephanie Gleason, Oct.19, 2012