America's oldest privately held clothing manufacturer has filed for bankruptcy after a federal pension protection agency ordered the company to replenish its underfunded retirement plan.
But the owners of the 133-year-old Hardwick Clothes Inc., insist the business remains viable and will continue operations while it reorganizes its finances -- and perhaps negotiates a sale or new investment in the company --under the protection of the U.S. Bankruptcy Court.
"We're certainly not insolvent," said Tommy Hopper, the fifth generation CEO of the family-owned company in Cleveland, Tenn. "Our building and assets are free and clear and we've always paid our bills so this was not a decision we entered into lightly.
"But we feel like we had to file a Chapter 11 petition (in bankruptcy court) to protect our business and its 225 employees. This is really the only course of action that we had."
Hardwick Clothes is among a handful of companies still producing tailored-made clothing in the United States. The company spun off its woolen mill plant in the 1950s to Peerless Mills, which later sold to Burlington. Hardwick has cut its staff in half over the past two decades. But Hardwick continues to compete against cheaper foreign imports by making signature blazers and sports coats, uniforms and other tailored clothing.
The company froze its defined benefit pension plan in 2006 and, after taking market losses during the Great Recession, asked the U.S. Pension Benefit Guaranty Corp., for assistance in shoring up its underfunded pension plan. Hardwick's pension plan covers 644 employees and retirees and has continue to make its promised retirement benefits.
But PBGC determined with only $11 million in assets, the plan was inadequately funded and ordered Hardwick in October to pay $7.3 million or it would file a $1.5 million tax lien on the company.
"I like to say that we are a well run company in a difficult business, but we're survivors," said Hopper, who has been the company president since 1996. "This (PBGC action) would have put us in a straight jacket, but we're confident we can survive with this bankruptcy protection."
To avoid a tax foreclosure, the company filed a petition late Monday to reorganize in bankruptcy court. Hopper said the company has received preliminary interest in buying some or all of the company, "but we're not there yet."
In the meantime, Hardwick Clothes is continuing normal operations.
Since its founding in 1880 by C.L. Hardwick, Hardwick Clothes has sold every type of men's garment imaginable, including jeans, dollar pants, knicker suits, even convict stripes and leisure suits. The company moved out of its downtown Cleveland mill in 1974 and its current 175,000-square-foot plant employs 225 employees.
The founding family also started Hardwick Bank in Dalton and Hardwick Stove Co. in Cleveland. Both of those businesses were previously sold to other companies.
Hopper said the clothing business has survived by concentrating on its founding principles: The pursuit of manufacturing and selling quality products.
"We tried doing imports for a while, but it didn't work because we couldn't do quality control," Hopper said.
In the early days, the company spun the fabric and sewed the clothes in a single factory, leading to the company motto, "From the sheep's back to the clothing rack."
Contact Dave Flessner at email@example.com or at 757-6340.