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Barneys Considers Bankruptcy Loan With Great American Capital

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Barneys’ advisers have been in discussions with Great American Capital Partners, the Los Angeles based- private equity firm. The retailer also already spoke to its current lenders: TPG Sixth Street Partners and Wells Fargo & Co., as per the source. Photo Credit: Shutterstock

By: Hadassah Kalatizadeh

Another major retail bankruptcy may be brewing.  

Barneys New York Inc. has been in talks with several lenders about financing its operations to keep the stores open, if it does choose to file for bankruptcy protection.  As reported by Bloomberg News, the company may head to bankruptcy court as early as next week, as per an inside source who did not wish to be identified.  The company is looking to attain a debtor-in-possession loan, through which it could stay open while working out a turnaround plan through Chapter 11 protection.  Talk of a second bankruptcy for the company has been circling since mid-July, though Barneys is still reportedly also contemplating other options. 

Barneys’ advisers have been in discussions with Great American Capital Partners, the Los Angeles based- private equity firm.  The retailer also already spoke to its current lenders: TPG Sixth Street Partners and Wells Fargo & Co., as per the source. It has yet to be determined how many of the chain’s stores, if any, will need to be closed in the turnaround plan. Barneys New York Inc did not comment, nor did the potential lenders. 

“The Barneys New York board and management continue to work constructively and collaboratively with a number of parties and are committed to reaching a mutually agreeable resolution to strengthen our business,” the company said in a statement.

The luxury department store chain was first opened 96 years ago by Barney Pressman.  His son Fred Pressman continued as a family business until the store went bankrupt in 1996.  Many of the chain’s boutiques were closed altogether then, and the rest of the company was sold to various buyers.  Since 2012, the company’s majority has been owned by Perry Capital, the hedge fund manager, which made several acquisitions that year.  Of late, the brick and mortar retailer has been struggling due to rapidly rising rental costs, and reduced cash flow due to competition from online luxury players such as Net- a-Porter and the RealReal.com, which have low overheads.  For example, Barneys’ Madison Avenue store rent will shortly nearly double to $30 million, following an unfavorable arbitration decision, as per CBS News. The company only has about $850 million in sales.

Barneys New York, founded in New York City in 1923, currently operates almost a dozen flagship stores around the U.S. including NYC’s Madison Avenue and Chelsea, Beverly Hills, Chicago, Seattle, Boston, San Francisco and Las Vegas. It also licenses twelve stores in Japan under a franchise agreement.

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