Brooks Brothers Group, clothier to financiers and presidents, filed for Chapter 11 bankruptcy protection in Delaware today as it continues to look for a buyer.
The company will also seek additional financing and expects to complete the sale process within the next few months, a spokesperson said, emphasizing that Brooks Brothers is not liquidating.
“For over 200 years, Brooks Brothers has remained resilient, navigating evolving fashion trends, fluctuating economic cycles and even world wars,” said owner, chairman and CEO Claudio Del Vecchio in a statement. “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.”
Brooks Brothers is the latest brand to take drastic action spurred by the Covid-19 pandemic, following similar filings by luxury purveyor Neiman Marcus, preppy lifestyle retailer J.Crew Group and department store chain JCPenney, among others.
The apparel retailer lined up $75 million in debtor-in-possession (DIP) financing from brand management firm WHP Global, which will fund the clothier’s operations during the bankruptcy process.
WHP is backed by private equity firms BlackRock and Oaktree Capital, and owns the Anne Klein and Joseph Abboud brands. Potential buyers for Brooks Brothers could include brand management firms Authentic Brands Group (which owns Barneys New York and Forever 21) and WHP, as well as private equity firm Solitaire Partners.
The clothier continues to work with investment bank PJ Solomon, which was advising the company on its financial options prior to the bankruptcy filing.
“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,” Del Vecchio said.
Brooks Brothers was already conducting an “evaluation of various strategic options” prior to the pandemic, including a potential sale, he added. “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.”
The spokesperson noted that any interested parties must submit bids, which will then be thoroughly reviewed by the company’s management team, board, and financial and legal advisers to ensure they are comprehensive and prioritize Brooks Brothers’ key stakeholders.
The company previously secured a $20 million term loan in late May from Gordon Brothers, which values, acquires, restructures and invests in underleveraged, distressed or dormant intellectual property.
“Gordon Brothers’ experience with brand-focused financings allowed them to quickly and commercially put together a financing solution for Brooks Brothers that will allow us to execute upon our operating plan,” said Steven Goldaper, Brooks Brothers’ CFO, in a statement at the time.
In addition, Brooks Brothers said it plans to halt operations at its manufacturing facilities in Massachusetts, North Carolina and New York by Aug. 15. These factories produce about 6.8% of its finished goods, including suits, ties and some shirts.
The retailer has also either closed or is in the process of closing 51 of its stores in the U.S.
The company’s international entities and JV partnerships are not debtors in the Chapter 11 proceedings and will continue to operate, according to the spokesperson.
Brooks Brothers was founded in 1818 and today operates over 200 stores in North America and 500 locations in 45 countries. In all, it has more than 1,400 point-of-sale locations worldwide.
The company claims to be the first American brand to offer ready-to-wear clothing and introduced innovations such as seersucker, madras, argyle, the non-iron shirt and the original polo button-down collar.