The fall of Brooks Brothers wouldn’t be complete without a drawn-out denouement of ignominy. And so the $27 billion Del Vecchio family is being sued by a former Hong Kong investor (suggesting perhaps globalism just isn’t good for American companies).
The billionaire Italian family that until recently owned Brooks Brothers has been accused in a lawsuit of driving the iconic apparel retailer into bankruptcy instead of selling it, to avoid paying millions of dollars to an investor.
In a complaint on Monday, Hong Kong clothing maker Tal Apparel said Claudio Del Vecchio and his son Matteo pressured it to invest $100 million in Brooks Brothers in 2016, and promised it would be “made whole” if they later sold the retailer for less than $652 million.
The complaint said the Del Vecchios lined up “several” bids for Brooks Brothers in 2019, before the COVID-19 pandemic, but did not pursue them because they would owe Tal money, and even asked if Tal would take a “haircut” on any payment.
Instead, the family put Brooks Brothers into Chapter 11 last July, making Tal’s original investment “nearly worthless,” according to the complaint in Manhattan federal court.
The defendants include the Del Vecchios and Delfin SARL, a holding company for family investments including eye wear giant EssilorLuxottica and Mediobanca. Claudio Del Vecchio bought Brooks Brothers in 2001.
A person close to the Del Vecchios said: “The allegations in the complaint are false and we expect the court will dismiss the case.” Delfin, which owns a small Brooks Brothers stake, declined to comment.
Tal is seeking $100 million of damages, less sums received from Brooks Brothers’ bankruptcy estate.
The 70-year-old family-run firm said it makes one in six dress shirts sold in the United States, and Brooks Brothers had been its largest customer.
Forbes magazine said on Tuesday the Del Vecchio family is worth $27.9 billion.
Founded in 1818, Brooks Brothers is the oldest continually operating U.S. apparel brand, known for its suits, preppy clothing, and dressing 40 U.S. presidents including Abraham Lincoln, John F. Kennedy and Barack Obama.
A venture backed by licensing company Authentic Brands Group and mall owner Simon Property Group acquired Brooks Brothers in bankruptcy for $325 million.
The case is Castle Apparel Ltd et al v Del Vecchio et al, U.S. District Court, Southern District of New York, No. 21-04406.