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Hartmarx workers rally to save company from liquidation, 2009
In 2009, Hartmarx Corporation workers fought to maintain their company and prevent liquidation. Legal and financial actions were taken in this fight. The course of nonviolent action that Hartmarx employees carried out only took place over a month. Hartmarx sought to convince Wells Fargo Bank, the company’s main creditor, to approve the sale of Hartmarx to a suitable buyer that would keep the company in business.
In early 2009, Hartmarx employed approximately 3,500 men and women. On January 23, Hartmarx filed for Chapter 11 bankruptcy protection after creditors cut Hartmarx’s credit lines. Hartmarx, a leading clothier for men and in business since 1872, was famous for making U.S. President Obama’s inauguration tuxedo and topcoat. Additionally, Wells Fargo had recently received a $25 billion bank bailout. Hartmarx employees repeatedly pointed to this bailout as a reason why Wells Fargo should be sympathetic to bankrupt companies. Due to these factors, this story quickly made it to national news and headlines.
Just a few days after filing for bankruptcy protection, Hartmarx CEO Homi Patel announced the goal: to protect to the greatest extent possible their 3,500 employees. Many powerful men and women joined Hartmarx in support of the cause. U.S. Representative Barney Frank (chairman of the House Financial Services Committee), U.S. Senator Charles E. Schumer of New York, U.S. Representative Phil Hare, Alex Giannoulias (Illinois State Treasurer), Illinois Governor Quinn, Mayor Marty Moylan (of Des Plaines, Illinois), Noel Beasley (Manager of Midwest Workers United), Tom Balanoff (President of Service Employees International Union, Illinois Council), and Ruby Sims (president of the Workers United union local at the plant) all allied with Hartmarx. Workers also tried to engage U.S. President Barack Obama.
On May 7, more than 500 workers from Hartmarx’s Des Plaines plant signed and sent a poster to President Obama that read, “Our jobs are worth saving, Mr. President”.
On May 11, Hartmarx workers at the Des Plaines plant, along with many allies, gathered at the factory to hold a protest rally. Members of the union as well as elected officials in office spoke in the presence of television cameras. The goal of the rally was to put pressure on Wells Fargo to keep the factory open. The slogan of the rally was: “Wells Fargo gets bailed out, workers get sold out.” One of the speakers was Alex Giannoulias, Illinois state treasurer, who threatened to cut off $8 billion worth of business that Illinois does with Wells Fargo if they closed the Hartmarx plant.
Several days later, union members met yet again and voted to stage a sit-in if Wells Fargo liquidated their factory. Previously, in December, workers at the Republic Windows and Doors factory in Chicago had participated in a successful six-day sit-in, fighting for a similar goal. This sit-in in Chicago greatly influenced Hartmarx employees on their votes to stage a sit-in themselves if Wells Fargo chose to liquidate their factory.
Over this period, union members had lobbied their Members of Congress so much that over 43 members of Congress signed a letter calling on Treasury Secretary Tim Geithner to investigate Wells Fargo’s use of its bailout money. Skeptics believed Wells Fargo was trying to liquidate Hartmarx in order to gain short-term profits. As a result, on May 20, Hartmarx workers held another large-scale rally.
At this point in time, three companies had expressed interest and had made reasonable offers to buy Hartmarx. These three companies were: Emerisque of London (would keep Hartmarx running), Yucaipa of California (would keep Hartmarx running) and Mistral Equity Partners of New York (planned to liquidate Hartmarx while using its brand names, Hart Schaffner and Hickey Freeman, overseas). Emerisque, after letting its bid expire on May 6, made a third and final bid on May 20, which added up to about $119 million. Mistral initially made an offer for the whole company but after unions began rallying workers to fight for their jobs, Mistral narrowed its focus down to solely buying Hartmarx’s women’s apparel business. Yucaipa expressed interest in buying Hartmarx’s tailored brands.
Emerisque’s bid would pay for Hartmarx’s debt. Hartmarx owed Wells Fargo and other creditors $114 million when it first filed for bankruptcy protection. Wells Fargo executives, however, threatened to cut off future credit to Hartmarx if Hartmarx chose Emerisque as its buyer. Wells Fargo claimed the bid was too low and failed to provide adequate value to Hartmarx’s creditors. Nevertheless, Hartmarx chose Emerisque as its preferred buyer. And on June 1, Hartmarx and Wells Fargo together decided that Emerisque was the leading bidder, and the U.S. Bankruptcy Court judge Bruce W. Black approved the offer. On June 25, the court officially approved the bid.
Over the next few months, there were some major issues over last-minute fees and other payments. But, indeed, Hartmarx was saved from liquidation after its official takeover in August. The new ownership (HMX Group) chose to close three Hartmarx plants in Rock Island, Illinois; Hamilton, Ontario; and Anniston, Alabama, at the cost of approximately five hundred jobs.