To the Tailored Brands team:
We have executed an agreement with our senior lenders that we expect will allow us to reduce our debt by at least $630 million, gain access to a new $500 million debtor-in-possession (DIP) revolving credit facility and best position our brands for the future. To implement the terms of this agreement, we have filed voluntary Chapter 11 petitions in the United States Bankruptcy Court for the Southern District of Texas.
I know this is not an outcome any of us anticipated a year—or even six months—ago, but the impact of COVID-19 requires us to further adapt and evolve. Decisive action has been taken to address our challenges, strengthen our financial position and enable us to compete more effectively in today’s retail environment and beyond. Here is what our decision to restructure means for our team, customers, vendors and shareholders:
Chapter 11 is designed to allow companies to operate as usual while they work to achieve their financial goals, and that is exactly what we intend to do. This includes paying employees as usual and continuing pre-existing employee health and welfare benefits. Accordingly, all non-furloughed employees should continue to work as scheduled.
Men’s Wearhouse, Jos. A. Bank, K&G and Moores are all open, and we expect that throughout the restructuring process we will continue to provide the selection, convenience, service and value that helps our customers look and feel their best in the moments that matter. We intend to honor rental reservations and custom orders, gift cards and our loyalty programs. Our continued customer obsession means the restructuring should be nearly invisible to our customers.
We are also committed to maintaining productive relationships with our vendors that help us serve our employees and customers.
The New York Stock Exchange has indicated that our stock will be delisted as a result of our Chapter 11 filing. However, we expect that our stock will continue to trade over-the-counter until the restructuring is complete. As a result of the restructuring, our equity holders could experience a significant or complete loss of their investment. If you own Tailored Brands stock, any questions you have about your shares should be directed to your financial advisor. We cannot advise you on your personal financial decisions.
The challenges of the last few months have vividly demonstrated our collective grit and commitment to building a stronger Tailored Brands. The decision to restructure and the financial flexibility that a restructuring can enable is an important milestone on that journey, and I hope you share in my excitement about the future possibilities this action creates.
As always, with the greatest respect for all you do for our customers and each other,
President & CEO
1. What did Tailored Brands announce?
Tailored Brands has taken decisive action to strengthen our financial position. We have executed an agreement with our senior lenders that we expect will allow us to reduce our debt by at least $630 million, gain access to a new $500 million DIP revolving credit facility and position our brands for success.
To implement this agreement as efficiently as possible, Tailored Brands and certain of our subsidiaries have chosen to use the protections and proven process outlined in Chapter 11 of the U.S. Bankruptcy Code.
2. What is Chapter 11?
Chapter 11 of the U.S. Bankruptcy Code outlines a proven process that allows companies to operate business as usual while they work to achieve their financial goals. We are entering this process thoughtfully and with the support of our senior lenders, who believe in the future of our business and our brands. The work already completed to get to this point will help these next steps to move faster.
3. Does this mean that Tailored Brands’ stores are going out of business?
No. This process is a means to a stronger future. While we are closing some stores based on the changing needs of our customers, the vast majority of our stores will remain open throughout the process and we will continue to operate our e-commerce business. Men’s Wearhouse, Jos. A. Bank, K&G and Moores are all open, and we expect that, throughout the restructuring process, we will continue to provide the selection, convenience, service and value that help our customers look and feel their best in the moments that matter.
4. Does Tailored Brands have plans to close any retail stores?
We announced previously that, given the impact of COVID-19 on our business, it may be necessary to permanently close up to 500 stores over time. Implementing the financial restructuring will allow us to continue our store optimization process to focus on and invest in the areas that will best position our business and brands for the future.
5. Does Tailored Brands have the financial resources necessary to continue operations as normal?
The protections offered by Chapter 11 of the Bankruptcy Code were specifically designed to allow companies like Tailored Brands to continue to operate as usual while they work to achieve their financial goals. Already, we have secured a commitment from our senior lenders for $500 million in new DIP financing, which is expected to convert to a $400 million revolving credit facility upon our emergence from Chapter 11. Subject to the Court’s approval, the DIP financing will bolster normal cash flows, allowing us to make regular payments to our employees, vendors and other partners.
6. Why was this decision made after previous organizational restructuring efforts?
Today’s actions build on the steps we’ve already taken to show up more efficiently and effectively for our customers, enhance our omni-channel strategies and build our brands. Optimizing our store fleet and aligning our corporate infrastructure to meet customer demand is one part of this effort. Now, we are taking a clear step forward to definitively address our financial challenges and best position Tailored Brands for the future.
7. How long is the restructuring process expected to take?
We aim to complete the Chapter 11 process as expeditiously as possible and, accordingly, expect to emerge a strong company and employer.
8. Will Tailored Brands’ existing Leadership Team stay in place?
Yes. Our Leadership Team remains the same.
9. How will this process impact day-to-day operations at Tailored Brands? How does this announcement affect my role and day-to-day responsibilities?
The Chapter 11 process allows companies like Tailored Brands to continue to operate as usual while they work to achieve their financial goals. We expect that most employees will see no change to their day-to-day roles and responsibilities as a result of the process. You should continue to work as scheduled and expect to be paid as usual.
10. I’m currently furloughed—how does this announcement impact me? Does this mean I’m losing my job permanently?
No. Our filing announcement does not impact the employment status of our currently furloughed employees. We are continuing to bring employees back to work in a phased approach based on criteria including customer demand for products and services, safety concerns (social distancing and local government occupancy guidelines) and fiscal evaluation.
11. Are any layoffs expected as a result of this announcement?
We recently announced our decisions to reduce our Corporate and Shared Services positions by about 20% and close up to 500 stores over time. These initiatives will continue, but we do not expect any additional changes as a result of the Chapter 11 process. We remain committed to treating our employees with respect, dignity and compassion, and are committed to sharing information as circumstances allow, connecting individually where possible, and supporting each other as we navigate this period of transition.
12. How does this announcement impact employees in Canada?
Most employees will see no change to their day-to-day roles and responsibilities as a result of the Chapter 11 process. This includes our employees in Canada. You should continue to work as scheduled and expect to be paid as usual. To confirm, as part of our Chapter 11 case, Moores is afforded the same protections as the U.S. businesses of Tailored Brands.
13. Will there be any changes to employee compensation or health and welfare benefits?
We have taken the necessary steps to ensure our pre-existing wage, salary and health and welfare benefit programs continue as normal.
14. Will the Chapter 11 process affect severance payments for those leaving our Company as a result the changes to our operating structure?
We have worked deliberately to protect severance for our departing employees.
15. What does this announcement mean for Store teams?
Stores have always been the core of our business and, as we move forward, this remains true. The Company announced previously that some of our stores are closing as we continue negotiations with landlords and match our footprint to current and anticipated traffic. That process will move forward as previously communicated.
Meanwhile, nothing about this news changes the operation of our stores. You should continue to report to work as scheduled and expect to be paid accordingly. The most important thing we can do is to work together to provide the exceptional store experience our customers expect from us.
16. What does this announcement mean for Supply Chain teams?
As the conduit between our products and our customers, our Supply Chain teams play a critical role for our business. Please continue reporting to work as scheduled, following all previously announced safety guidelines. You should be very proud of all that you do for Tailored Brands and our customers. We encourage you to continue showing the same spirit and support.
17. How will employees be kept informed during this process? Where can I go if I have additional questions?
We will provide periodic updates as we continue this process, and you will receive mailed legal notices from Prime Clerk, a third-party partner supporting the more administrative elements of our Chapter 11 process. If you have additional questions, please reach out to your manager or EC member.
18. Why am I receiving mailed legal notices? Is any action required from me?
As part of the Chapter 11 process, we are required to send legal notices to a majority of stakeholders, including employees, regarding certain events in the bankruptcy case. If any action is required of you (or available to you), the next steps will be outlined in the documents you receive. For further information, please visit our case website at http://cases.primeclerk.com/TailoredBrands.
19. If I believe I have a claim in the Chapter 11 case, am I able to file it without disclosing my personal information?
We have taken the necessary steps to ensure our pre-existing wage, salary, and health and welfare benefit programs continue as normal and, accordingly, believe the vast majority of employees will not have a claim in our Chapter 11 case.
Employees who do wish to file a claim related to unpaid severance or other matters may redact certain personal information related to their claims from publicly available materials. You should first submit the claims form according to the directions included on the form (see additional details at https://cases.primeclerk.com/tailoredbrands/EPOC-Index). You may then email [email protected] indicating the information you would like to have redacted. Please note that Tailored Brands cannot submit either the claims form or the request to redact personal information on your behalf.