Barneys New York’s push to secure a stalking-horse bidder paid off with a $271.4 million deal with Authentic Brands Group and lender B. Riley Financial Inc. But the prospect of other bids surfacing in the coming days still leaves some mystery about what the luxe retailer’s reincarnation will look like.
The ABG-led bid covers Barneys’ assets — including its web site — as well as its intellectual property and lease designation rights. If ABG’s bid is successful, it would have a window of time to continue negotiating with the company’s landlords as it decides whether to drop or assume those leases.
“B. Riley Financial and our affiliates are pleased to work with ABG in support of preserving the value of Barneys New York and its iconic brand,” a representative for B. Riley said Thursday.
In the meantime, the deadline for other qualified bids — which would require a signed agreement and proof of finances — is Tuesday. If ABG’s bid gets qualified competitors, there will be a closed auction by Oct. 24, to be held at the New York City offices of Barneys’ law firm, Kirkland & Ellis LLP. The New York bankruptcy court overseeing the proceedings can approve a sale at a hearing scheduled for Oct. 31.
If ABG’s bid succeeds, it would set off liquidations at the retailer’s seven remaining physical stores, according to a person familiar with the matter. When Barneys filed for bankruptcy on Aug. 6, it announced it was closing 15 stores.
Even with ABG’s apparent plans to liquidate Barneys’ inventory, the lease designation rights mean it could still opt to preserve any Barneys stores, depending on discussions with landlords. In that scenario, ABG could choose then to re-merchandise and reshape any stores it does keep.
The stalking-horse bid doesn’t necessarily represent Barneys’ preferred bid, just the one that checked off all the necessary boxes before Barneys’ deadlines this month with its debtor-in-possession lenders, Brigade Capital Management and B. Riley.
In order to outbid ABG and B. Riley, rival bids must amount to a figure higher than the sum of the $271.4 million stalking-horse agreement and an $8.1 million break-up fee under the agreement, according to court documents.
Kith backer Sam Ben-Avraham was previously said to have been interested in pursuing a going concern bid for Barneys. Fashion financier Gary Wassner has also been trying to buy the company and is still seen as trying to put together some kind of a business plan to back up his interest in saving the retailer.
While the fate of Barneys’ physical stores remains vague, the union representing some 800 Barneys employees including retail sales and warehouse workers said it is “doing everything possible to see these 800 workers stay employed.”
“There is a personal touch that matters in the retail and service industries,” said Julie Kelly, manager of the New York New Jersey Regional Joint Board of Workers United/SEIU, which represents Barneys’ workers. “It’s the people selling clothes, tailors fitting garments, people in at the warehouse shipping online orders, and people sewing clothes right here in New York, among others.”