A business bankruptcy may be a Chapter 7 bankruptcy or a Chapter 11 bankruptcy. A Chapter 11 bankruptcy involves reorganizing the business and restructuring its current debts, rather than completely liquidating the business, as is the case with a Chapter 7 bankruptcy.
As this blog already wrote about recently, HMX Acquisition Corp. filed for Chapter 11 bankruptcy on Oct. 19, and it also notified the New York labor department that the manufacturing plant in Rochester, New York, and the corporate headquarters in New York City could close in December. HMX is best-known as the parent company of the Hickey Freeman clothing label.
This closing would affect 71 employees at the headquarters and 431 workers at the plant, prompting the Workers United labor union to stage a rally in the parking lot of the plant. The union also called for a boycott of the company’s clothing brands if the new owners of HMX close the Rochester plant.
HMX has already sectioned off $65 million in financing to continue operations and pay vendors. Hickey Freeman was previously owned by Hartmax, which filed for bankruptcy in 2009. Hartmax was subsequently acquired by the clothing companies Emerisque Brands and SKNL.
The Chapter 11 bankruptcy in this case may allow HMX Acquisition Corp. to void its existing contracts and reduce its past-due sales taxes to a manageable level. The owners of this business will need to learn about all of their legal options for bankruptcy as they restructure their business.
And the workers are obviously worried about their own financial security if the company lays them all off. Some of the workers may need to consider filing for personal bankruptcy if they lose their job and health care coverage.
Source: Associated Press, “NY Hickey Freeman workers rally after Ch.11 filing,” Oct. 22, 2012