President Barack Obama and Mitt Romney may butt heads about everything else, but they seem to be in agreement about men’s formal wear. Obama and Romney have been known to sport Hickey Freeman and Hart Schaffner Marx suits fairly frequently.
HMX Group, the parent company of the two brands, recently filed for bankruptcy, leading to speculation that the company’s traditionally American-made suits, may soon sport “Made in [insert foreign county]” tags. Brand aficionados can exhale, however, since lead bidder Authentic Brands Group LLC has assured customers that if it acquires HMX, it will continue to manufacture the suits stateside, The Wall Street Journal reports.
HMX filed for Chapter 11 bankruptcy earlier in the month after racking up over $11 million in debt. According to the filings, Hong Kong-based Pacificways Ltd has the biggest claim of $1.5 million.
In a Chapter 11, the debtor company restructures in order to pay off its creditors. That often involves selling assets, closing branches, renegotiating contracts, merging with other companies, or attracting new investors and buyers. HMX is currently looking for a new owner to lift the company out of bankruptcy. But will a change of hands mean a change in quality?
HMX’s suits have always been made at the company’s Rochester factory, known as “The Temple.” If the winning bidder lays off the factory’s 450 workers and moves production overseas, its sales could take a hit. “I’m telling you, they won’t sell a single suit here in the United States,” Sen. Charles Schumer said, according to the Journal. “There will be an international boycott.”
Authentic Brands, the lead bidder and likely next owner, knows the value of the brand’s reputation and doesn’t plan to move the production facilities anywhere. Instead, Authentic would own HMX, but license the brands to a newly formed company. The new company will then hire HMX’s current employees, including the Rochester factory workers, according to the WSJ.
In order to make the company profitable again, Authentic plans to expand the brand to overseas markets. If Authentic’s offer is accepted, HMX could exit bankruptcy by the end of the year, the Journal reports.
- Hickey Freeman Parent Company Faced Mounting Financial Woes (Democrat and Chronicle)
- Debt Relief (FindLaw)
- Corporate Bankruptcy: What Every Investor Should Know (FindLaw)
- Chinese, American Bidding War Breaks Out for A123 Systems (FindLaw’s Phoenix Bankruptcy Law Blog)