Cleveland businessman Allan Jones won the bidding contest to acquire Hardwick Clothes at a hearing held Friday morning.
U.S. Bankruptcy Judge Shelley D. Rucker gave the court’s blessing to the sale after hearing no objections to the proposed transaction.
Jones will pay $1.9 million for the company’s assets, which he will acquire “free and clear of liens, claims, interests and encumbrances.”
The closing on the sale is expected to occur on or prior to June 16.
“It is bittersweet,” said Hardwick CEO and President Tommy Hopper. “But the employees of Hardwick’s future has been ensured. That’s something that with the business we’ve been in the last few years we just haven’t been able to do.”
He said Jones would have the resources to run the company “the way it deserves to be run.”
“Those people deserve it. It’s a great company and great employees,” Hopper said. “Sure, it’s bittersweet for the Hardwick family, but the Hardwick family has always relied on those great workers out there to see us through everything and I think it’s only fitting.”
He said he expects an initial “sigh of relief” from the employees.
“Certainly, the last couple of weeks had gotten everyone on edge,” Hopper said. “I think once things settle down there will be real enthusiasm and excitement. I think Allen can bring that like nobody else can. It’s just what Hardwick needed.”
Jones said the road to success is an uncertain one in the immediate future.
He expected to finalize a new chief executive officer for the company as early as Friday, and an announcement would be made when that decision process is completed.
Jones said he wonders about whether acquiring a business he admits to having no experience in now involves nerves or excitement.
“We’re going to try to make the best blazer in the world,” he said. “At one time, Hardwick was considered to be the maker of the best blazers in the world. Then, we’re going to look at making the best khaki pants in the world. We’re wanting to create a niche.”
Jones repeated his thoughts that the employees are “the biggest assets of the company.”
“The most important asset wasn’t on the balance sheet, and it was them,” he said. “We want to be real loyal to the employees because we need them.”
He said there would be some changes on the horizon, but those are still undetermined.
“We’ve got to stop the hemorrhaging of $100,000 a month,” Jones said.
He said Hardwick is the oldest traditional suit maker in the country as well as the second oldest business in Cleveland.
“We’ve got to build on that tradition, and I think we can,” Jones said.
He said plans are to raise an American flag from the era when the company was founded over the facility as a reminder of that tradition.
The flag is already incorporated into a new logo that was introduced when Jones announced his original bid.
The hearing which occurred on Friday morning was not without its points of drama, as much of the last few weeks have been awaiting the potential of another bidder.
Bruce Bailey, legal counsel for Hardwick, presented to the court the background of the attempted bid by local Realtor Joe V. Williams III.
According to Bailey, Hardwick was not going to object to the bid, which was filed four minutes after the 5 p.m. deadline on May 30.
Bailey said he had been in talks with an attorney from the Atlanta area that was representing Williams, but soon after was informed that counsel was withdrawing from the case.
He said the decision to disqualify the bid came down to having no cash deposit and the purchase payment being tied to financing — both of which violated the terms of the bidding as ordered by the court.
Williams was at the hearing with his counsel, David J. Fulton of Chattanooga.
But Fulton had filed a motion to withdraw from the case, which he addressed to the court.
He told Rucker that Williams still wanted to testify about the cash availability.
Rucker said Williams, “according to local laws,” could not do that without counsel and denied Fulton’s request to withdraw.
Jeffrey Maddox, counsel for Hardwick, then questioned Hopper about the status of the company and why the sale to Jones was important.
Hopper said Williams’ bid would have called for a closing date in late August which would have added almost $250,000 to the $735,000 now owed to Keltic Financial.
Keltic stepped in with a $2 million line of credit and became Hardwick’s “debtor in possession” and would be paid their due the same day as a Hardwick sale closes.
Operating on the line of credit for two extra months “would be bad for the company and the creditors,” Hopper said.
He also testified the reason for requiring a cash deal is because the clothing business is a “cash-intensive business,” and the summer months usually are slower and more costly.
After Hopper’s testimony, Rucker asked if Fulton was prepared to make a presentation.
Jerrold Farinash, counsel for Jones, stood and told the court, “Your honor, Mr. Fulton and Mr. Williams have left the building.”
“What?” Rucker asked somewhat incredulously.
“They have left the building, your honor,” Farinash responded.
“OK,” Rucker said.
After a few more minutes of clearing up some technical issues, Rucker ordered the sale to proceed.
Minutes later, Jones and Hopper greeted each other with smiles and handshakes on the courthouse steps.
“Welcome to the manufacturing business,” Hopper was overheard telling Jones.
Both men then posed with their supporting staffs giving a “thumbs up” to the morning’s decision.