Bidders emerge for Obama suit maker

May 22, 2009 (CHICAGO) Hartmarx Corp., which sells business and golf attire, said Friday it has signed an agreement to sell all its assets for about $85.5 million to "stalking horse" bidders Emerisque Brands U.K. Limited and SKNL North America BV. Hartmarx labels include Hickey-Freeman, Palm Beach, Naturalife, b.chyll and others.

In bankruptcy court parlance, stalking horse bidders typically make an initial offer that will be accepted only if other higher bids do not emerge. The deal will be subject to a competitive auction in bankruptcy court.

Chicago-based Hartmarx custom-made the suit Obama wore on Election Night as well as the suit and the tuxedo he wore on Inauguration Day.

Hartmarx was forced into Chapter 11 protection on Jan. 23 after lenders cut it off. Its biggest creditor, Wells Fargo, had pushed for a liquidation because it hasn't been able to repay $114 million. Earlier, Illinois Gov. Pat Quinn had said it is "only right and just" that Wells Fargo agree to a sale. Illinois Treasurer Alexi Giannoulias promised to cut off state business with the bank if it liquidates the company.

Emerisque and SKNL propose paying $70.5 million in cash and $15 million in the form of a junior secured note. They also propose the assumption of certain liabilities worth about $33.5 million.

Hartmarx Chief Executive Homi Patel said the deal was the "best and highest" it had received. Other interested bidders have included New York-based Mistral and Los Angeles-based Yucaipa, which is thought to be interested in the men's labels.

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