New York
Barneys, which plans to slim down to seven stores after closing 15 locations, reached a deal for a financial lifeline that gives the retailer until late October to find a buyer or commence a liquidation that would close its doors for good. “We do not have a white knight as we stand here right now,” said Joshua Sussberg, a Kirkland & Ellis LLP restructuring lawyer representing Barneys, during an emergency bankruptcy-court hearing in New York.
On Tuesday, Barneys reached a deal for roughly $218 mn in fresh financing from Brigade Capital Management LP and B. Riley Financial Inc that would repay existing lenders and help the company operate while pursuing a sale, Sussberg said. US Bankruptcy Court Judge Cecelia Morris allowed Barneys to tap $75 mn of that loan.
The bankruptcy filing represents a significant fall for a nearly century-old luxury retailer that attracted cutting-edge fashion designers, celebrities and bestowed an aura of chic among its shoppers. Barneys owes money to Yves Saint Laurent, Gucci, Prada and Canada Goose, among other creditors, according to bankruptcy-court papers filed Tuesday.
“If you are a good person and you work hard, you get to go shopping at Barneys. It’s the decadent reward,” actress Sarah Jessica Parker, star of HBO television series “Sex and the City,” once told Vanity Fair magazine, according to Barneys’ website.
The retailer, which employs about 2,300 people, spent the past two months searching for a buyer or an investor, grappling with a steep hike in rent at its Manhattan flagship store on Madison Avenue to roughly $30 mn a year from $16 mn. That was on top of pressure from high-end online retailers including Richemont-owned Net-A-Porter and Farfetch.
Those factors combined to create a cash crisis at Barneys. In turn, many vendors stopped shipping merchandise unless Barneys paid cash on delivery, a development that “paralyzed the inventory stream,” said Mohsin Meghji, the company’s restructuring chief and founder of turnaround firm M-III, in a court filing.
Italian apparel company Moncler, which sells luxury down coats usually fetching more than $1,000, said it began postponing deliveries of some its latest collections as early as June.
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