Brooks Brothers has received approval from bankruptcy court to defer millions of dollars in rent payments as it undergoes bankruptcy proceedings.
According to a filing today in the United States Bankruptcy Court in the District of Delaware, the storied American clothier will not be required to immediately pay about $7.2 million in monthly rent obligations related to 207 nonresidential property leases. Instead, it was given until September 7 to make those payments.
In an effort to preserve liquidity, Brooks Brothers over the past few months has furloughed about 2,900 employees, reduced the salaries of its remaining workers, announced the shutdowns of three U.S.-based manufacturing facilities and reduced expenses to “only those necessary to preserve the debtors’ estates.”
“Quite simply, with limited revenue generating options during these unprecedented circumstances, immediately paying the debtors…is not prudent or in the best interest of the debtors’ estates and creditors,” it wrote in a filing on July 16, which was referenced in today’s filing that detailed the judge’s approval.
The deferral was granted to Brooks Brothers three weeks after it filed for Chapter 11 protection amid the coronavirus pandemic and an overwhelming shift to casual office attires. At the time of the filing, a company spokesperson wrote that the purpose of the filing was to obtain additional financing as well as “facilitate a sale process in an efficient manner.”
Last week, the bankrupt chain announced that SPARC Group LLC — a venture created by Authentic Brands Group and Simon Property Group — made a stalking-horse bid of $305 million to snap up its business operations as a going concern. The group also plans to preserve at least 125 of its stores.
The deal is subject to court approval and any higher or better offers as part of the Brooks Brothers’ ongoing auction process. A hearing for bidding procedures will take place on Aug. 3, and the company has requested that the deadline for competing offers be set for Aug. 5. The final sale of its assets is set for Aug. 11.
The New York-based chain operates about 250 stores in North America and planned to shutter just over 50 locations as a result of the COVID-19 health crisis, which forced widespread closures across the retail sector. It has more than 500 stores around the world, as well as maintains wholesale partnerships with department stores including Nordstrom and Macy’s, which sell its collections.