Tailored Brands (TLRD) - Get Tailored Brands, Inc. Report, the owner of the Men’s Wearhouse and JoS. A. Bank brands, is likely to pursue chapter 11 bankruptcy protection as soon as its fiscal third quarter amid plunges sales related to the coronavirus pandemic and economic collapse.
In a filing made with the Securities and Exchange Commission on Monday, the Houston-based company said it was “… likely that we will pursue a reorganization under applicable bankruptcy laws, possibly as soon as during the third quarter of fiscal 2020, which begins on Aug. 2, 2020.”
Specifically, the company said in the filing that it doesn’t have enough cash on hand or expected cash to pay its creditors under its asset-backed loan facility beginning in the fourth quarter of fiscal 2020.
In this scenario, shareholders probably will be wiped out, the company said.
Management is exploring alternatives, “including seeking a restructuring, amendment or refinancing of our debt through a private restructuring or reorganization under applicable bankruptcy laws,” the retailer said.
Tailored Brands earlier this month said it would cut about 20% of its corporate positions by the end of the second quarter and close as many as 500 stores due to "the unprecedented and industrywide business disruptions resulting from the coronavirus pandemic," resulting in a $6 million second-quarter charge.
In addition, the company announced that Chief Financial Officer Jack Calandra was leaving the company as of July 31.
To be sure, Tailored Brands had been struggling financially well before recent events. The company in 2014 brought on AlixPartners to advise on its merger between Jos. A. Bank and Men's Wearhouse.
AlixPartners is a New York consultant known for its work in turning around companies. It has advised on some of the largest Chapter 11 reorganizations including General Motors (GM) - Get General Motors Company (GM) Report, Kmart and Enron Corp.
As of Feb. 1, Tailored Brands had about 13,700 employees and operated 1,450 stores under the Men's Wearhouse, Men's Wearhouse and Tux, Jos. A. Bank, and K&G brands.
Tailored Brands joins a growing list of retailers that are seeking bankruptcy protection, not only amid plunging demand related to to the pandemic and rapid economic about-face but also due to drastic changes in what consumers spend money on, specifically work office-geared attire.
Tailored Brands stock was trading at 43 cents a share on Tuesday.