Item 1.01 Entry into a Material Definitive Agreement.
The information set forth below in Item 1.03 in this Current Report on
Form 8-K under the captions "Restructuring Support Agreement" and
"Debtor-in-Possession Commitment Letter" is hereby incorporated by reference in
this Item 1.01.
Item 1.03 Bankruptcy or Receivership.
Voluntary Petition for Reorganization
On August 2, 2020 (the "Petition Date"), Tailored Brands, Inc. (the "Company")
and certain of its subsidiaries (together with the Company, the "Debtors")
commenced voluntary cases (the "Chapter 11 Cases") under chapter 11 of title 11
of the United States Code (the "Bankruptcy Code") in the United States
Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court").
The Bankruptcy Court has granted a motion seeking joint administration of the
Chapter 11 Cases under the caption In re: Tailored Brands, Inc., et al., Case
No. 20-33900 (MI). The Debtors will continue to operate their businesses
as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in
accordance with the applicable provisions of the Bankruptcy Code and the orders
of the Bankruptcy Court. To ensure their ability to continue operating in the
ordinary course of business, the Debtors have filed with the Bankruptcy Court
motions seeking a variety of "first day" relief, including authority to access
cash collateral and debtor-in-possession financing, pay employee wages and
benefits, honor customer programs and pay vendors and suppliers in the ordinary
course for all goods and services provided after the Petition Date.
Restructuring Support Agreement
On August 2, 2020, the Company and certain of its subsidiaries and affiliates
(together with the Company, the "Company Parties") entered into a Restructuring
Support Agreement (together with all exhibits and schedules thereto, the "RSA")
with members of an ad hoc group of lenders (the "Consenting Term Loan Lenders")
under the Term Loan Credit Agreement, dated as of June 18, 2014 (as amended,
supplemented or otherwise modified from time to time, the "Term Loan Credit
Agreement"), by and among, The Men's Wearhouse, Inc., ("Men's Wearhouse"), as
borrower, certain of the Company Parties, as guarantors, Wilmington Savings Fund
Society FSB (as successor to JPMorgan Chase Bank, N.A.), as administrative
agent, and the lenders from time to time party thereto. In the aggregate, the
Consenting Term Loan Lenders hold over 75 percent of the Debtor's first lien
debt. Capitalized terms used but not otherwise defined in this "Restructuring
Support Agreement" section of this Current Report on Form 8-K have the meanings
given to them in the RSA.
The RSA contemplates a restructuring process that will establish a financially
sustainable operating company ("Reorganized Tailored"). The contemplated
restructuring process includes (i) the commencement by the Debtors of voluntary
cases under chapter 11 of the Bankruptcy Code, (ii) the acquisition of the DIP
ABL Facility (as defined below) from the Debtors' current ABL lenders, (iii) the
Consenting Term Loan Lenders agreeing to compromise their prepetition claims in
exchange for, among other things, exit debt and 100% of the new common stock of
Reorganized Tailored; (iv) the Consenting Term Loan Lenders agreeing to the
consensual use of cash collateral; and (v) the implementation of exit financing
for Reorganized Tailored (which is described below), each on the terms set forth
in the RSA.
The RSA contains various milestones, including the following: (a) within 5 days
of the Petition Date, the Bankruptcy Court shall have entered an interim order
approving the DIP ABL Facility and the Debtors' use of the Cash Collateral, (b)
within 10 business days of the Petition Date, the Debtors shall have filed a
motion with the Bankruptcy Court requesting an extension of the time within
which the Debtors may assume or reject leases of nonresidential real property
under section 365(d)(4) of the Bankruptcy Code to 210 days following the
Petition Date (the "365(d)(4) Motion"), (c) within 10 days of the Petition Date,
the Debtors shall have filed a motion seeking to implement procedures for store
closings, (d) within 14 days of the Petition Date, the Debtors shall have
delivered a lease optimization plan and real estate plan in form and substance
reasonably acceptable to the Required Consenting Term Loan Lenders, (e) within
15 days of the Petition Date, the Debtors shall have filed the Plan and related
disclosure statement (the "Disclosure Statement") with the Bankruptcy Court, on
terms consistent with the Restructuring Term Sheet, (f) within 40 days of the
Petition Date, the Bankruptcy Court shall have entered a final order approving
the DIP ABL Facility and the Debtors' use of the Cash Collateral (the "Final DIP
Order"), (g) within 50 days of the Petition Date, the Bankruptcy Court shall
have entered an order approving the 365(d)(4) Motion, (h) the Debtors shall have
provided the outcome of a lease optimization plan in form and substance
reasonably acceptable to the Required Consenting Term Loan Lenders prior to the
hearing to consider approval of the Disclosure Statement, (i) within 70 days of
the Petition Date, the Bankruptcy Court shall have entered an order approving
the Disclosure Statement, (j) within 105 days of the Petition Date, the
Bankruptcy Court shall have entered an order approving the Plan and (k) within
120 days of the Petition Date, the Plan Effective Date shall have occurred.
The RSA also provides that the RSA may be terminated by the Required Consenting
Term Loan Lenders or the Company Parties upon the occurrence of certain events
set forth therein.
Although the Company Parties intend to pursue the restructuring contemplated by
the RSA, there can be no assurance that the Company Parties will be successful
in completing a restructuring or any other similar transaction on the terms set
forth in the RSA or at all.
The foregoing description of the RSA is not complete and is qualified in its
entirety by reference to the RSA, a copy of which is attached to this Current
Report on Form 8-K as Exhibit 10.1 and is hereby incorporated by reference in
this Item 1.03.
Debtor-in-Possession Commitment Letter
On August 2, 2020, prior to commencement of the Chapter 11 Cases, the Company,
Men's Wearhouse and Moores The Suit People Corp. ("MTSP") entered into a
commitment letter (together with all exhibits and schedules thereto, the
"Commitment Letter") with the parties listed on the signature pages thereto (the
"Commitment Parties"), pursuant to which, and subject to the satisfaction of the
applicable conditions precedent contained therein, including the entry by the
Bankruptcy Court of the Interim Order (as defined in the "Form DIP Credit
Agreement" attached as Exhibit A to the Commitment Letter), the Commitment
Parties committed to provide to the Company a superpriority secured
debtor-in-possession credit facility in the aggregate principal amount of
$500,000,000 under Sections 364(c) and 364(d) of the Bankruptcy Code (the "DIP
ABL Facility"). The DIP ABL Facility is expected to include conditions
precedent, representations and warranties, affirmative and negative covenants
and events of default customary for financings of this type and size. The
proceeds of all or a portion of the proposed DIP ABL Facility may be used by the
Debtors (i) to pay certain costs, fees and expenses related to the Chapter 11
. . .
Item 2.04 Triggering Events that Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement.
The filing of the Chapter 11 Cases constitutes an event of default that
accelerated obligations under the following debt instruments and agreements (the
"Debt Instruments"):
• Indenture, dated as of June 18, 2014 (as amended, supplemented or otherwise
modified from time to time), by and among Men's Wearhouse, the guarantors
party thereto and the Bank of New York Mellon Trust Company, N.A., as trustee;
• Term Credit Agreement, dated as of June 18, 2014 (as amended from time to
time), by and among Men's Wearhouse, the lenders party thereto and Wilmington
Savings Fund Society FSB (as successor to JPMorgan Chase Bank, N.A.), as
administrative agent;
• Guarantee and Collateral Agreement, dated as of June 18, 2014 (as amended from
time to time), by and among Men's Wearhouse, the other loan parties from time
to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent;
and
• Credit Agreement, dated as of June 18, 2014 (as amended from time to time), by
and among the Company, Men's Wearhouse, each of the other U.S. subsidiary
borrowers from time to time party thereto, MTSP, the Canadian guarantors from
time to time party thereto, the lenders from time to time party thereto,
JPMorgan Chase Bank, N.A., as administrative agent, and JPMorgan Chase Bank,
N.A. Toronto Branch, as Canadian administrative agent (the "Existing ABL
Facility").
The Debt Instruments provide that, as a result of the Chapter 11 Cases, the
principal and interest due thereunder shall be immediately due and payable. Any
efforts to enforce such payment obligations under the Debt Instruments are
automatically stayed as a result of the Chapter 11 Cases, and the
creditors' rights of enforcement in respect of the Debt Instruments are subject
to the applicable provisions of the Bankruptcy Code.
Item 7.01 Regulation FD Disclosure.
Press Release
In connection with the filing of the Chapter 11 Cases, the Company issued a
press release on August 2, 2020, a copy of which is attached to this Current
Report on Form 8-K as Exhibit 99.1.
Cleansing Material
Prior to the filing of the Chapter 11 Cases, the Company entered into
confidentiality agreements (collectively, the "NDAs") with the Consenting Term
Loan Lenders and certain other creditors. Pursuant to the NDAs, the Company
agreed to publicly disclose certain information (the "Cleansing Material") upon
the occurrence of certain events set forth in the NDAs. A copy of the Cleansing
Material is attached to this Current Report on Form 8-K as Exhibit 99.2. The
Cleansing Material was prepared by the Company solely to facilitate a discussion
with the parties to the NDAs and was not prepared with a view toward public
disclosure and should not be relied upon to make an investment decision with
respect to the Company. The Cleansing Material should not be regarded as an
indication that the Company Parties or any third party consider the Cleansing
Material to be a reliable prediction of future events, and the Cleansing
Material should not be relied upon as such. The Cleansing Material includes
certain values for illustrative purposes only and such values are not the result
of, and do not represent, actual valuations, estimates, forecasts or projections
of the Company Parties or any third party and should not be relied upon as such.
Neither the Company Parties nor any third party has made or makes any
representation to any person regarding the accuracy of any Cleansing Material or
undertakes any obligation to publicly update the Cleansing Material to reflect
circumstances existing after the date when the Cleansing Material was prepared
or conveyed or to reflect the occurrence of future events, even in the event
that any or all of the assumptions underlying the Cleansing Material are shown
to be in error.
The information disclosed in this Item 7.01, including Exhibits 99.1 and 99.2,
is being furnished and shall not be deemed "filed" for purposes of Section 18 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
otherwise subject to the liabilities of that Section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act, regardless of any general incorporation language
in such a filing.
Cautionary Statement Regarding Forward-Looking Information
The Company has included statements in this Current Report on Form 8-K that may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. In addition, words such as "expects,"
"anticipates," "envisions," "targets," "goals," "projects," "intends," "plans,"
"believes," "seeks," "estimates," "guidance," "may," "projections," and
"business outlook," variations of such words and similar expressions are
intended to identify such forward-looking statements. The forward-looking
statements are made pursuant to the Safe Harbor provisions of the Private
Securities Litigation Reform Act of 1995. Any forward-looking statements that we
make herein are not guarantees of future performance and actual results may
differ materially from those in such forward-looking statements as a result of
various factors. Factors that might cause or contribute to such differences
include, but are not limited to: risks attendant to the bankruptcy process,
including the Company's ability to obtain court approval from the Bankruptcy
Court with respect to motions or other requests made to the Bankruptcy Court
throughout the course of the Chapter 11 Cases, including with respect to any
proposed debtor-in-possession financing; the ability of the Company to
negotiate, develop, confirm and consummate a plan of reorganization; the effects
of the Chapter 11 Cases, including increased legal and other professional costs
necessary to execute the Company's reorganization, on the Company's liquidity
(including the availability of operating capital during the pendency of the
Chapter 11 Cases), results of operations or business prospects; the effects of
the Chapter 11 Cases on the interests of various constituents; the length of
time that the Company will operate under Chapter 11 protection; risks associated
with third-party motions in the Chapter 11 Cases; Bankruptcy Court rulings in
the Chapter 11 Cases and the outcome of the Chapter 11 Cases in general;
conditions to which any debtor-in-possession financing is subject and the risk
that these conditions may not be satisfied for various reasons, including for
reasons outside the Company's control; the effects of the COVID-19 pandemic and
uncertainties about its depth and duration, including the health and well-being
of our employees and customers, temporary store closures, increases in the
unemployment rate, furlough or temporary layoffs of our employees, our ability
to increase our liquidity and preserve financial flexibility, and social
distancing measures or changes in consumer spending behaviors; actions or
inactions by governmental entities; domestic and international macro-economic
conditions; inflation or deflation; the loss of, or changes in, key employees;
success, or lack thereof, in formulating or executing our internal strategies
and operating plans including new store and new market expansion plans; cost
reduction initiatives and revenue enhancement strategies; changes to our capital
allocation policy; changes in demand for our retail clothing or rental products,
including changes in apparel trends and changing consumer preferences; market
trends in the retail or rental business; customer confidence and spending
patterns; changes in traffic trends in our stores; customer acceptance of our
merchandise strategies, including custom clothing; performance issues with key
suppliers; disruptions in our supply chain; severe weather; regional or national
civil unrest or acts of civil disobedience; public health crises, including the
recent coronavirus outbreak; foreign currency fluctuations; government export
and import policies, including the enactment of duties or tariffs; advertising
or marketing activities of competitors; the impact of cybersecurity threats or
data breaches; legal proceedings and the impact of climate change.
Forward-looking statements are intended to convey the Company's expectations
about the future, and speak only as of the date they are made. We undertake no
obligation to publicly update or revise any forward-looking statements that may
be made from time to time, whether as a result of new information, future
developments or otherwise, except as required by applicable law. However, any
further disclosures made on related subjects in our subsequent reports on Forms
10-K, 10-Q and 8-K should be consulted. This discussion is provided as permitted
by the Private Securities Litigation Reform Act of 1995, and all written or oral
forward-looking statements that are made by or attributable to us are expressly
qualified in their entirety by the cautionary statements contained or referenced
in this section.
Item 9.01 Financial Statements and Exhibits.
(d)
Exhibit
10.1 Restructuring Support Agreement
Exhibit
10.2 Debtor-in-Possession Commitment Letter
Exhibit
10.3 Form DIP Credit Agreement
Exhibit
10.4 Exit Facility Term Sheet
Exhibit
99.1 Tailored Brands, Inc. Press Release issued August 2, 2020
Exhibit
99.2 Cleansing Material
Exhibit Cover Page Interactive Data File (the cover page XBRL tags are
104 embedded in the Inline XBRL document contained in Exhibit 101).
© Edgar Online, source Glimpses