Brooks Brothers Files for Bankruptcy
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Brooks Brothers succumbed to its debts amid the coronavirus crisis and filed for bankruptcy in Delaware this morning.
The company listed both its assets and liabilities as ranging between $500 million and $1 billion.
The filing was not a surprise — WWD reported Tuesday that it was coming shortly. Brooks Brothers entered the process with $75 million in debtor-in-possession financing obtained from WHP Global, the newly formed brand management firm headed by Yehuda Shmidman that is among the parties interested in acquiring the business. Brooks’ largest creditor is Swiss Garments Co., which is owed $5.2 million.
In addition to WHP Global, sources have said Authentic Brands Group in partnership with Simon Property Group and Brookfield Property Partners is also interested in acquiring the business.
“For over 200 years, Brooks Brothers has remained resilient, navigating evolving fashion trends, fluctuating economic cycles and even world wars,” said Claudio Del Vecchio, chairman and chief executive officer of Brooks Brothers. “Our long history is a testament to the strength of our brand and our mission since 1818: serving customers through innovation, fine quality, personal service and exceptional value.”
He added: “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. Prior to COVID-19, we were already conducting an evaluation of various strategic options to position the company for future success in a rapidly transforming retail environment, including a potential sale of the business. Industry headwinds were only intensified by the pandemic. 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 Wednesday that it will “commence a competitive auction where parties can submit qualified bids,” and the sale process is expected to be completed within the “next few months, pending court approval.” Until that time, the company will continue to operate its business and will continue to examine the reopening of stores that have been closed since March due to the coronavirus pandemic. Prior to the filing, Brooks Brothers had decided to permanently close approximately 51 of its 250 U.S. stores.
With the filing, Brooks Brothers joins a host of other companies — including Neiman Marcus Group and J. Crew Group — that found themselves heavily indebted and without enough to reinvent their businesses in the midst of the pandemic.
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