One of the oldest American retailers, Brooks Brother is in talks with financial institutions and banks about a potential bankruptcy that could come as soon as July, after the Covid pandemic caused sales figures to plummet.
Earlier in April this year, Bloomberg news had reported Brooks Brothers exploring an option for a sale, and while that is still on the table, the other strategic option is filing for court protection.
The company will look towards debtor-in-possession (DIP) financing to support operations in bankruptcy, but the extent of the loan has not been determined yet and will largely depend on the number of stores closed in any potential bankruptcy proceedings.
Claudio Del Vecchio, CEO of Brooks Brothers, has expressed that the company is not very keen to resort to Chapter 11 bankruptcy filings, but it is an option they have to consider to keep up in times like these.
Many other famous retailers like J. Crew, Neiman Marcus and JCPenney have been driven to consider bankruptcy as an option.
With over 250 stores in USA and an almost equal number of locations internationally, the 202-year-old retailer had earlier hired investment bank P.J. Solomon to explore the options of sale or bankruptcy.
However, despite interests from buyers due to the strong brand name, they would rather buy the company out of bankruptcy.