Made-in-the-USA manufacturer Unionwear (asi/73775) has filed for Chapter 11 bankruptcy due to issues surrounding a critically underfunded multi-employer union pension plan.

President Mitch Cahn says the bankruptcy process began in 2015 when the pension plan collapsed due to the closing of four Atlantic City casinos whose union employees were participants in the same plan as Unionwear’s employees. The underfunding created a technical accounting problem for the company’s balance sheet.

“About 25,000 people lost jobs and they were all guaranteed a pension by the union,” Cahn told Counselor. “Now that the union is insolvent, the money has to come from somewhere so our company was assessed several million dollars. It's more like a mortgage that was put on our house by someone who we feel had no right to do so.”

Unionwear’s parent company, New Jersey Headwear Corp., wants court approval to sell its business assets to a private investment firm. “We want a judge to say this transaction is a completely legal way to avoid paying the pension debt of other companies,” Cahn said.

While the process is underway, Cahn stressed that it’s business as usual for the Newark, NJ-based supplier. “Unionwear will operate normally both during the approval process and after this sale,” Cahn said. “Orders will be filled. Quality, service and delivery will be maintained. Vendors, lenders, wages and benefits will be paid. All 150 employees, including the entire management team, will be retained.”

The bankruptcy process has taken place in the midst of Unionwear’s most profitable year, owing in part to the U.S. presidential election. The company produced hats for presidential contenders Hillary Clinton, Jeb Bush and Bernie Sanders, as well as both the Democratic and Republican conventions. The company briefly manufactured hats for president-elect Donald Trump during the campaign, and also produced hats for comedian John Oliver with the slogan “Make Donald Drumpf Again” after a sketch on his HBO show “Last Week Tonight.”

Founded in 1992, Unionwear manufactures and embroiders headwear, bags, safety gear and accessories.

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