By: Mike Mustiglione
It seems that Barneys New York has been rescued from impending bankruptcy. The luxury clothing store has worked out a deal in the hopes that their Madison Avenue flagship store can continue to exist as a mainstay for New York City shoppers
The NY Post has reported that Saks Fifth Avenue along with the licensing firm Authentic Brands Group will help Barneys avoid bankruptcy by paying out $270 million. The deal, if approved by the court, could help save three Barneys stores — in Beverly Hills, Midtown Manhattan and Boston — and give Barneys a presence in thriving Saks stores, these sources told the Post.
Under the deal, ABG would acquire the Barneys brand and Saks would pay a licensing fee to operate Barneys.com and create a Barneys store within Saks. The size of the Barneys mini-stores could be between 10,000 and 50,000 square feet, said a source with knowledge of the situation, according to the Post report.
The Post reported that ABG is also in negotiations with Barneys’ landlord, Ashkenazy Acquisition, to keep open its stores in Beverly Hills and on Madison Avenue flagship, where its rent more than doubled this year — which triggered its bankruptcy. The branding company, which owns Juicy Couture and Frederick’s of Hollywood brands, is also talking with Barneys’ Boston landlord Simon properties to keep that store open, this person added.
The parties that had loaned money to Barneys New York Inc.’s had moved their deadline to this Tuesday – by which time the clothing retailer had to come up with a concrete offer from a buyer.
An attorney for Barneys said at a bankruptcy-court hearing last Friday “that the company needs a few more days to firm up a potential deal with a lead bidder, or stalking horse, that would keep the chain alive,” according to The Wall Street Journal.
“A group of fashion executives led by Sam Ben-Avraham, who founded the hip New York retail store Atrium in the 1990s as well as the streetwear brand Kith, is assembling a consortium of retail veterans and brand investors to help fund a bid that would avoid a Barneys liquidation,” The Journal reported. “Others in the consortium include Theory co-founder Andrew Rosen, who has backed brands including Proenza Schouler and Rag & Bone; Intermix founder Khajak Keledjian; real-estate investor and Scoop co-founder Uzi Ben Abraham, who is also Mr. Ben-Avraham’s brother; and Reformation founder Yael Aflalo, according to a person familiar with the matter.”
Ben-Avraham “has been putting his mark on the New York retail landscape since the mid-’90s, when he founded Atrium, a boutique that sold streetwear alongside high fashion brands like Balmain, Moncler, and Ralph Lauren,” noted gq.com. “When Sam opened Atrium he wanted to recreate the department store format on a specialty store level,” the store’s men’s buyer said in an interview, when the Brooklyn outpost opened in 2012\—a premise not unlike that of Barneys’ during the golden age of the ’80s and ’90s, when the store had a reputation for exclusive products and undiscovered designers. When Fieg partnered with Ben-Avraham to found Kith in 2011, the pair opened the first two stores as outposts in the back of Atrium’s Brooklyn and Manhattan locations. When Atrium closed its final locations, in Soho and Miami, in 2016, both were converted into Kith stores.”
In a recent court filing, Barneys claimed that it was wrapping up talks with multiple bidders vying to become the stalking horse, which would provide the starting bid for the auction scheduled on Oct. 24, according to Women’s Wear Daily.
In August, the luxury specialty retailer announced that it had secured approximately $218 million in new financing from Brigade Capital Management, LP to facilitate a going concern sale process. The new agreement, the company said, replaced the previously announced $75 million agreement with affiliates of Hilco Global and the Gordon Brothers Group and will refinance all of Barneys New York’s existing secured indebtedness.
