One very prominent bankruptcy myth is that only the lazy and poor file for bankruptcy. This is an inaccurate statement. Honest debtors who have fallen on hard times, for various reasons like sickness or loss of a job, file for bankruptcy to get a fresh start in their financial life.
Large and popular companies also file for bankruptcy, further dispelling the bankruptcy myth. One of the latest companies to file for bankruptcy is Hart Schaffner Marx, the men’s suit designer. The company is not a small, unknown brand.
Both presidential candidates, Barack Obama and Mitt Romney are customers of Hart Schaffner Marx. It would appear that there is no better publicity than presidential candidates wearing your designs. Presidential campaigns are on a nationwide level and election coverage is seen by millions of viewers across the country. This means a lot of eyes could have potentially been on Hart Schaffner Marx suits, which could have translated into a lot of revenue.
Nonetheless, the company recently filed for Chapter 11 bankruptcy for the second time since 2009. Chapter 11 bankruptcy is the Chapter used for businesses whose debts substantially exceed its assets.
The company plans to auction the assets it does have. Brand licensing company Authentic Brands Group is expected to begin the bidding. If Authentic Brands Group successfully acquires Hart Schaffner Marx’s assets, it plans to license the brand to a new company that will hire Hart Schaffner Marx’s current employees. This is good news for employees who do not want to suffer the same personal financial fate that their employer did. Loss of a job is one of the leading causes of personal bankruptcy filings.
When a business files Chapter 11 bankruptcy, it may continue operating during its Chapter 11 case. Hart Schaffner Marx has reportedly acquired $65 million in financing from one of its lenders, Salus Capital Partners, which is also one of Hart Schaffner Marx’s lenders, to allow Hart Schaffner Marx to keep its door open.