Hartmarx sale completed; Seaford plant in Rock Island not included, will close - Quad Cities Online

Hartmarx sale completed; Seaford plant in Rock Island not included, will close

Originally Posted Online: Aug. 07, 2009, 7:29 pm
Last Updated: Aug. 07, 2009, 7:59 pm  
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By Brandy Donaldson, bdonaldson@qconline.com
Seaford Clothing Co. in Rock Island is being closed, leaving upwards of 350 employees without a job, U.S. Rep. Phil Hare, D-Rock Island, confirmed Friday.

After months of haggling, the sale of bankrupt Seaford's parent company, Hartmarx, to United Kingdom-based Emerisque and its partner, SKNL North America BV of India, was completed Friday, according to a statement from the new owners. But the transaction did not include Seaford or a factory in Alabama, Rep. Hare's office confirmed

"From what we were told, Seaford is part of the corporation not acquired by Emerisque," Tom O'Donnell, chief of staff for Rep. Hare said Friday evening. "A deal was struck. The problem is, the Seaford plant was not part of the deal."

Friday's sale came after a tense day in which last-minute demands from Hartmarx for more money threatened to derail the entire deal. As the transaction took place in Chicago late Friday, rumors of imminent layoffs began to circulate at the Rock Island plant.

The rumors turned out to be true

"I am greatly disappointed by this announcement," said Rep. Hare. "I pushed as hard as I could so that the loyal and hard working employees at Seaford could keep their jobs.

"In the end, it was out of the hands of the workers, government officials and union leaders who fought mightily to keep this facility open.

"As the deal was negotiated, it was apparent that Hartmarx had significant debts and accounting issues due to mismanagement at the company that was not known before," said Rep. Hare, himself a former Seaford employee.

"The millions of dollars in additional costs due to this proved too great to allow a deal to go forward that would keep the company intact," he said. "Unfortunately, the Seaford plant and its workers are the victims of this gross mismanagement."

According to Mr. O'Donnell, employees were told only those who received a letter of notification would remain with the company. He said he was told only three received those letters.

Rep. Hare was the guest of honor at a celebration at Seaford in late-June celebrating a U.S. Bankruptcy Court decision to allow Hartmarx to liquidate its assets. It was thought at that time the sale would save Seaford's jobs.

Rep. Hare said he will work to assist those losing their jobs.

"I will do all that I can to see that these employees get the help they need in trying to find new employment as well as any transitional benefits to help them and their families while they look for work," he said. "As a former worker at Seaford, my heart goes out to all of the workers and their families."

A new company, known as Hartmarx Operating Co. LLC, will run the Hartmarx clothing maker for Emerisque and SKNL North America BV of India.

"We are delighted to have completed this acquisition. This is an important step forward towards our ambition of being clothiers to the world," Nitin Kasliwal, chairman of SKNL and the new Hartmarx said in a news release Friday.

The release came after hours of uncertainty during which it seemed possible that the long discussed sale would fall apart. At the last minute, Hartmarx demanded Emerisque pick up an additional $3.1 million in fees, according to filings in a bankruptcy case.

Final details of the deal were not immediately available.

In January Hartmarx, the 120-year-old men’s suit manufacturer that outfits President Barack Obama, filed for Chapter 11 bankruptcy protection after its credit was cut off. The company had amassed $114 million in debt and its creditor, Wells Fargo, subsequently pushed for liquidation.

In June, the agreed-upon total for the transaction was $119 million. Although continued bargaining and last-minute requests for more money likely altered that amount, the final purchase price is unknown

In the original sale agreement, Emerisque agreed to pay $17.5 million in administrative expenses, court records said. On July 30, Emerisque agreed to cough up an additional $2,635,000 to pay Hartmarx’s closing costs, “administration claims” and bankruptcy fees.

Bankruptcy court records state Hartmarx later sought even more money, including $700,000 in legal fees and $2.4 million it “determined should be paid before they are willing to close the sale transaction."

How that issue was resolved wasn't immediately apparent.

Friday attempts to reach representatives of Workers United Local 617, Emerisque and attorneys for both companies were unsuccessful.

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