Barneys New York’s bankruptcy estate said Friday that its Chapter 11 plan to exit the proceedings — which typically includes arrangements on how to repay its debts to vendors, employees and others — has overwhelming support among its creditors.
In filings in New York bankruptcy court, the company said that more than 82 percent of its general unsecured creditors, who are owed money for goods and services performed before Barneys filed for bankruptcy in August, as well as more than 180 administrative creditors who provided goods and services during the bankruptcy, support the plan.
“The plan is the culmination of the debtors’ unceasing efforts to realize the highest possible recoveries for stakeholders under extremely challenging circumstances,” the company wrote in the filing. “Indeed, the debtors’ management team and advisors spent many hours both pre- and post-petition evaluating and negotiating restructuring alternatives to provide the most value for the debtors’ stakeholders.”
Many of the plan’s previous dissenters, including Google and an employees’ union, have resolved their disagreements with the company, Barneys said in the filing Friday. Google had previously said it was owed more than $975,000 for its advertising services during the bankruptcy proceedings, but has since resolved its objection, according to court filings.
Likewise with the New York-New Jersey Regional Joint Board affiliated with Workers United, the union representing Barneys employees including warehouse, sales and other workers at its Madison Avenue and Downtown New York locations, a tailor shop in Long Island City, and a distribution center in Lyndhurst, N.J.
The union had argued earlier this month that the employees it represents are covered by collective bargaining agreements that provide for severance and paid time off claims, and that it needed more information from Barneys about how those claims would be addressed.
In court filings earlier this month, Barneys had projected having up to $4 million in severance obligations, which it said would be funded at least partly by a $2 million employee severance escrow account.
For its part, the union said it had estimated administrative severance pay to amount to roughly $5 million, and administrative paid time off to be worth roughly $1 million.
“The debtors have unique knowledge as to which employees have been severed or resigned, how much is owed to each individual, and which employees may have executed lawful releases,” the union wrote at the time. “A lack of information has led to uncertainty and anxiety among bargaining unit employees about their recoveries from this bankruptcy, whether and how long to continue working, and how to plan their lives.”
A hearing on the plan is scheduled for Tuesday in New York bankruptcy court.
Meanwhile, Barneys is also hearing from vendors who had shipped their goods to the retailer on consignment. On Thursday, Sidney Garber Fine Jewelry said that it was owed $105,440 by Barneys as of when it filed for bankruptcy, and that it is now seeking to retrieve the jewelry it had sent. The jeweler, which like many others that ship to retailers on consignment, said it took the necessary safeguards to protect its merchandise, including filing uniform commercial code, or UCC statements, with the New York Department of State.
The filing highlights the legal precautions that vendors who ship to retailers on consignment have to take in order to be able to get their inventory back in case of a bankruptcy, said David Wander, who chairs the bankruptcy, financial restructuring and creditor rights department at Davidoff Hutcher & Citron LLP. Wander is representing another vendor in the Barneys case.
“You file the UCC, and give notice to any lender that has a lien on all inventory — it would typically be the pre-petition lenders — and if you don’t give notice to the lender that has a lien on all inventory, you would have to show that the lender knew, or should have known, that the debtor had goods on consignment that was part of its business model,” he said.
“Jewelry companies have been doing this for a long time and they usually get it right.”