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Hartmarx and beyond

July 8th, 2009  |  Connie Eyer

>Hart Schaffner Marx, an Illinois-based maker of men’s apparel that boasts President Obama as one of its regular customers, recently averted liquidation after it was purchased by Emerisque, a London-based private equity firm. Hartmarx employs nearly 4,000 people nationwide. Here is a look back at the struggle displayed by its workers and supporters over the last six months:

January 2009: Only a few days after President Obama wore one of their suits to his inauguration, Hartmarx, Inc. declared bankruptcy, citing lower borrowing capacity under Wells Fargo, a senior creditor.

May 2009: By early May, Hartmarx had attracted three potential buyers, two of which, it was reported, intended to keep the company intact. Rumors flew, however, that Wells Fargo, which was a recipient of federal bailout funds, was leaning towards a third buyer that favored liquidation. This threat, however, was enough to galvanize workers, supporters, union leaders and federal lawmakers to put a little pressure on Wells Fargo. Two Congressional members at the forefront of this fight, Rep. Phil Hare (D-Ill), who spent 13 years in the employ of Hartmarx, and Rep. Jan Schakowsky (D-Ill), whose great-aunt also worked at the company, urged the bank to keep the company afloat.

During a few days in May, rallies featured labor leaders and workers, along with Rep. Hare and Illinois Treasurer Alex Giannoulias, who threatened to cut off the State of Illinois’ $8 billion in business with Wells Fargo if the company proceeded with liquidation plans. The Hartmarx workforce, in a page taken from that of the Chicago-based Republic Windows and Doors, whose employees staged a successful sit-in to secure the 60 days’ severance and unused vacation days they were lawfully owed, voted to occupy the plant if liquidation were the outcome.

On May 20, Emerisque resubmitted a substantial offer to purchase the company. Choosing not to take this for granted, the next move included a letter to Treasury Secretary Timothy Geithner, written by Schakowsky and Hare and signed by over 40 members of Congress, stressing that the liquidation of Hartmarx should not be an option. “Given the fact that American taxpayers have provided Wells Fargo/Wachovia with $25 billion,” the letter read, “we find it incomprehensible that it would continue to push for the loss of jobs in a viable company.”

Wells Fargo released a statement May 29 opposing the bid by Emerisque, contending that the company “has committed to sell Hartmarx factories in Rock Island, Ill., and Cape Girardeau, Mo., and its distribution centers in Easton, Penn., and Rector, Ark., all within three months of the acquisition.” Emerisque disputed the bank’s claim, noting that “the only factual component of the Wells Fargo statement today is that they believe they should realize a higher cash return on their claim.”

June 2009: Talks, however, continued, and a resolution was finally reached whereby Emerisque revised its cash offering from a numerical amount to a percentage of the debtor-in-possession financing provided by the lending group to keep Hartmarx operating during the bankruptcy process.

When the approval of Emerisque was finally announced on June 26, Rep. Hare noted that “today’s approval of Emerisque’s bid to buy Hart Schaffner Marx and the cooperation by Wells Fargo is good news for nearly 4,000 workers, their families, and our economy. It is proof positive that the voices of America’s working men and women still do matter, even in an era of unprecedented greed.”

Related worker uprising news: In the wake of Hartmarx’s victory, the focus now moves to Moline, Illinois, where Wells Fargo has cut off credit to the Quad City Die Casting factory. Workers at the plant, who are members of the same union that occupied Republic Windows and Doors last year, are calling for Wells Fargo to keep the plant open. As of yet, the bank has refused to even sit down with the union and negotiate.

Stay tuned.