US men's clothier Brooks Brothers is now in talks with lenders to help it raise finances for a possible bankruptcy protection filing. The company, which is the country's oldest clothier, is expected to file for bankruptcy protection as soon as July following months of near-zero sales due to the closures of its stores during the coronavirus pandemic.
The Manhattan-based firm is reportedly also continuing its sales process, which it had launched earlier in the year. There is reportedly a lot of interest in the company and a successful sale could lead it to scrap its bankruptcy plans altogether. For now, the company is moving forward in engaging negotiations with different banks to acquire debtor-in-possession (DIP) financing.
Acquiring sufficient financing would help the company continue its operations after it files for bankruptcy protection. The company has yet to reveal how large of an amount in DIP loans it would need for it to continue its operations amid bankruptcy. Sources close to its operations explain that the amount would greatly depend on how many stores it will leave open if it does file for bankruptcy protection.
The company's chief executive officer, Italian billionaire Claudio Del Vecchio, mentioned in an interview that he does not want the company to file for bankruptcy, but the option is still there as a last resort. The clothier, which was founded in 1818 as a family business, has been hit hired by the months-long economic shutdown caused by the coronavirus pandemic.
The clothier reportedly hired investment bank PJ Solomon to help it explore different options to keep the business afloat, this included a possible sale of its assets or the company itself and a bankruptcy filing if worse comes to worst. Brooks Brothers have stated that it has yet to make a decision regarding its course of action, adding that it currently has nothing to report at this time.
Analysts point out that while there is ample interest in the purchase of the company, most will likely want to wait until it files for bankruptcy so that they would be able to purchase a smaller chunk of its store footprint. The company currently has more than 250 stores in the US and another 500 stores spread across different countries.
Brooks Brothers join other US retailers that are now scrambling to shore up their finances to ensure their continued operations and survival after months of zero revenues. US retailers such as J Crew, JC Penny, and Neiman Marcus have already been driven to bankruptcy after their finances collapse amid the state-ordered closure of their stores to mitigate the spread of the disease.
