Tailored Brands Likely to Go Bankrupt in Third Quarter

Tailored Brands said in 10-Q “it is 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.” In this scenario, shareholders probably will be wiped out, the company said.

The owner of Men’s Wearhouse has “considered the projected impact of Covid-19 on our cash flows and analyzed our future compliance with the financial covenants under our ABL Facility, including an additional discretionary reserve imposed against our borrowing base, as described in Note 19, and based on such projections and analysis, we will not remain in compliance with the fixed charge coverage ratio covenant under the ABL Facility beginning in the fourth quarter of fiscal 2020.”

  • The company said it probably won’t make good on a missed interest payment of approximately $6.1 million due July 1 on its 2022 notes.
  • Management is exploring alternatives, “including seeking a restructuring, amendment or refinancing of our debt through a private restructuring or reorganization under applicable bankruptcy laws.”
    • “Although management’s projections indicate non-compliance with the fixed charge coverage ratio beginning in the fourth quarter of fiscal 2020, it is likely that we will pursue a reorganization under applicable bankruptcy laws prior to the occurrence of such non-compliance or well in advance of such date, possibly as soon as during the third quarter of fiscal 2020. Should we reorganize under applicable bankruptcy laws, there will likely not be any value distributed to our shareholders and our shares could be cancelled for no consideration.”
  • Filing: Tailored Brands Inc: 10-Q 2020/05/02

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