An executive with the former owner of Seaford Clothing Co. denied Tuesday that there were any unexpected liabilities or demands for money sprung on the buyers of the plant's Chicago-based parent just before the purchase was finalized nearly three weeks ago.
The last-minute demands for more money, as well as unexpected liabilities, have been cited by U.S. Rep. Phil Hare, D-Ill., and union officials as the reason for the sudden closure of the Rock Island clothing maker in the wake of the sale.
More than 300 people were thrown out of work as a result.
The reasons for the abrupt closure have been unclear since London-based Emerisque Brands UK Limited and SKNL North America B.V., finalized its purchase of Chicago-based Hartmarx Corp. on Aug. 7.
The buyers issued a statement that day, but it did not mention Seaford, even though workers were learning that day they wouldn't have a job come that Monday.
A plant in Alabama also was closed.
Repeated attempts to interview Emerisque officials about the reasons for the closure since then have failed. The old Hartmarx Corp., which is now called XMH Corp. 1, responded to the Quad-City Times for the first time Tuesday.
In an interview, Taras Proczko, executive vice president for the old Hartmarx Corp., said that contrary to Hare's and the union's claims, the company did not make any unknown, last-minute demands of the new buyers.
"It is not true that there were additional demands made for more money that the buyers didn't already know about," he said. "They'd known about it for weeks."
In the final days before the closing, there were ongoing talks over a number of issues, including the amount of administrative claims, according to bankruptcy court filings.
Hartmarx filed for bankruptcy in January, and Emerisque and SKNL North America were approved as buyers in late June.
The closing date, however, took longer than expected.
In a court filing Aug. 6, the day before the closing, Emerisque and SKNL North America complained that in the previous 24 hours, Hartmarx had demanded $2.4 million more in undisclosed and unexpected administrative claims.
That included $700,000 in counsel fees, documents said.
They portrayed it as an attempt to sabotage the sale.
Union officials and Hare's office have said the unexpected demands contributed significantly to the closure.
Proczko denied the claims were a surprise, however.
"The buyer had full visibility of the seller's finances," he said.
He said it had weekly access to its budgets.
Emerisque officials could not be reached again Tuesday to respond to Proczko's comments, despite repeated attempts.
Hare, a former Seaford employee who waged a fight to keep the plant open for months, said Tuesday he didn't believe the denials.
"I don't buy it," he said. "That's clearly not what I'm hearing from Emerisque and the union."
Hare's staff has said he has spoken with Emerisque's founder, Ajay Khaitan, since the sale closed, but they have declined to discuss the conversation.
Proczko's denial comes a day after an official with Workers United, the union representing Seaford workers, said that it intended to file a claim in federal bankruptcy court alleging the old Hartmarx company violated federal law by failing to give 60 days notice of a plant shutdown.
Joe Costigan, the regional representative for Workers United, said Monday the claim was going to be filed against the former owners because they had failed to provide the notice.
He said 60 days pay would be sought for the workers as a remedy.
In the interview Tuesday, Proczko said the buyers told the former owners "at the very last minute" that it would not need the Seaford employees, making it impossible to provide the required 60-day notice.
Posted in Local on Wednesday, August 26, 2009 2:00 am | Tags: Seaford Clothing, Phil Hare, Hartmarx, Taras Proczko
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