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Brooks Brothers Latest Retailer To File Chapter 11
The 202-year-old company, known for its classic suits, owns the Alexis Bittar and Carolee jewelry brands.
New York—Long hurt by Casual Fridays and hampered by COVID-19 in its efforts to find a buyer, Brooks Brothers and its fashion jewelry subsidiary have filed for bankruptcy protection.
The 202-year-old company, known for its stylish suits and preppy casuals, filed for Chapter 11 bankruptcy protection Wednesday in U.S. Bankruptcy Court in Delaware, with the goals of obtaining new financing and quickly finding a buyer.
“Like countless other retail companies, Brooks Brothers’ business has been impacted by significant operational and manufacturing challenges, as well as shifting retail industry trends in recent years,” said the retailer’s Chief Restructuring Officer Stephen Marotta of Ankura Consulting Group LLC in an affidavit filed Wednesday.
In 2019, Brooks Brothers began looking for a buyer or a merger opportunity but the onset of COVID-19 derailed that effort, making the storied-but-struggling retailer the latest to seek protection under Chapter 11.
“Our priority is to start this important chapter with a new owner that has appreciation for the Brooks Brothers legacy, a vision for its future, and aligns with our core values and culture,” Chairman and CEO Claudio Del Vecchio said in a company statement.
“Seeking protection to facilitate an efficient sale of the business is the best next step for the company to achieve its goals, over any other alternative.”
Brooks Brothers said it has secured commitments from investment company WHP Global for $75 million in debtor-in-possession financing, a type of financing extended to companies in distress overseen by the lender and subject to court approval.
The financing together with cash flows from ongoing operations will support it through the sale process, said the company.
The retailer is going to hold an auction where parties can submit qualified bids, and said it expects to complete the sale process in the next few months, pending court approval.
To our loyal customers. pic.twitter.com/OcAqFbu8v2— Brooks Brothers (@BrooksBrothers) July 8, 2020
Filing alongside Brooks Brothers Group Inc. was jewelry subsidiary Deconic Group LLC, which manufactures, merchandises, markets, sells and licenses the Alexis Bittar and Carolee fashion jewelry brands.
The brands are sold online, at stores like Nordstrom and Bloomingdales, and through nine retail stores located in the Northeast, Midwest and in California. Deconic also leases an office and manufacturing facility in Brooklyn’s Industry City development and a showroom in Manhattan.
Brooks Brothers acquired Carolee LLC in 2001 and, under Carolee, Alexis Bittar in 2016. It overhauled its fashion jewelry business in 2017, relaunching as Deconic.
Deconic brought in approximately $15 million in
Asked about the future of Deconic, a company spokesperson noted the bankruptcy filing is “a sale process, not a liquidation of Brooks Brothers or Deconic’s brands.”
“Deconic will continue to do business as usual for the time being [and] we do not expect this to interrupt our ability to deliver the brands Alexis Bittar and Carolee,” the spokesperson said.
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Founded in 1818 as H. & D.H. Brooks & Co. in New York, Brooks Brothers is the oldest apparel company in the United States, it noted in the bankruptcy filing.
The company operates about 425 retail and factory outlet stores worldwide, including 236 in the United States.
Like so many retailers, it closed nearly all of its stores when the pandemic hit and furloughed 2,900 of its 4,025 employees worldwide.
It said Wednesday that 51 of its 236 U.S. stores, or 22 percent, have closed or are in the process of closing permanently, while the others will reopen “as local and state public health and government officials allow and as it is economical to do so.”
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