Buyers line up as Brooks Brothers approaches bankruptcy filing

By

Robin Driver

Published
Jul 8, 2020

As news circulates about an imminent Chapter 11 bankruptcy filing from historied American fashion retailer Brooks Brothers, Inc., potential buyers are reportedly preparing for a possible bidding war for the company.
 

According to reports from various outlets, interested parties include Authentic Brands Group (ABG), in partnership with Simon Property Group and Brookfield Property Partners, as well as Marquee Brands and Sequential Brands.
 
The troubled retailer has also attracted the attention of Solitaire Partners and WHP Global, the recently founded brand management company led by Yehuda Shmidman which, along with ABG, is considered to be one of the strongest contenders in the race.

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Solitaire Partners is run by David Jackson, former CEO of Dubai’s Istithmar World, which owned Barneys from 2007 to 2012. Jackson’s plans for Brooks Brothers would reportedly involve maintaining the franchise intact and continuing to manufacture apparel independently, a respectful approach to the brand’s legacy which may differentiate its offer.
 
Founded in July 2019, WHP has already purchased the Anne Klein and Joseph Abboud trademarks, and recently received further financing from Oaktree Capital Management, whose investment in the firm now totals $350 million, bringing its overall funds up to over $1 billion.
 
It is ABG, however, which is seen by many as the strongest bidder. With backers including BlackRock, Leonard Green & Partners, General Atlantic and Lion Capital, the firm purchased Sports Illustrated for $110 million last year and also beat a bid from Jackson to reclaim Barneys, purchasing the luxury department store chain for $271 million.
 
ABG also acquired Forever 21 for $81.1 million in February and, should its bid for Brooks Brothers be accepted, it is expected to employ a similar strategy to that it used for this deal. Here, ABG and Simon Property Group acquired 37.5% stakes in the company’s intellectual property and operating business, while Brookfield Property Partners claimed 25%. All of Forever 21’s stores remained open following the deal, but the brand gained a new CEO, in the form of H&M alum Daniel Kulle.
 
Brooks Brothers has been hit hard by the Covid-19 pandemic. However, although the health crisis may have proved to be the final straw, many of the almost 250 U.S.-based stores run by the brand, which has approximately $600 million in debt, had reportedly been struggling long before the onset of the pandemic.
 
Brooks Brothers has repeatedly refused to pass comment on the possibility of a bankruptcy filing.