The next step for Barneys New York appears to be bankruptcy court — and it is said to have lined up $75 million in debtor-in-possession financing from Hilco and Gordon Brothers.
A source said $25 million of that would go to pay vendors post-bankruptcy. Brands have over the past few weeks cut back on their shipments to the cash-strapped retailer.
Neither Hilco nor Gordon Brothers immediately responded to WWD queries Monday.
After the bankruptcy filing, the beleaguered retailer will be looking for a partner to help find its future.
Given the stresses on the business after a mammoth rent hike at its Madison Avenue flagship this year, the best option might well be one that plays to the strength of its brand. Authentic Brands Group is said to be close to the process, putting itself into the position to step in as a bidder once Barneys has filed.
Other players could also emerge once the company files. Barneys owner Richard Perry and its chief executive officer Daniella Vitale have both been out courting would-be partners and a company that took a look earlier might be enticed back under the cover of bankruptcy.
If an intellectual property-centric company like ABG did win out in court, it would give the brand a chance at another new life, but would likely lead to dramatic changes in the company’s operations.
Regardless, Barneys is widely expected to shutter most of its full-price stores in any bankruptcy process and at best focus on two or three key locations, most likely the Madison Avenue and Beverly Hills flagships.
“It’s a great brand and good name, it just has real estate and overhead issues, with a company like ABG helping to reconstruct a business plan, it can continue to be successful in a smaller footprint,” said one source following the action. “It can exist, but in a smaller boutique format.
ABG, which is run by chief executive officer Jamie Salter, is known for buying intellectual property and building big new businesses out of familiar names. Salter could not be reached for comment.
The brand-heavy approach has helped ABG generate $9 billion in retail sales by licensing names as diverse as Marilyn Monroe, Juicy Couture and Aéropostale. Most recently, the company acquired Sports Illustrated.
But first, Barneys has to get to court.
The company has been teetering on the edge for months and scrambling for options. Its bankruptcy could come as soon as this evening and would mark Barneys’ second tour through the court process after slipping into insolvency in 1996.
News of Barneys working with Hilco and Gordon Brothers was first reported by The Wall Street Journal.