This photo shows the Barneys department store in New York. The luxury retailer could be joining a growing list of retailers that have filed for bankruptcy. Barneys New York is filing for Chapter 11 bankruptcy protection, the latest retailer to buckle as shoppers move online. The iconic clothier founded almost a century ago will keep the doors open at its 10-story Madison Avenue store, but it has secured $75 million in financing to pay employees and vendors as it seeks a buyerBarneys Bankruptcy, New York, USA - 16 Jul 2019

While what’s left of the Barneys New York liquidation sales draw to a close later this month, parts of the fallen retailer are also winding down in bankruptcy court. 

In a short hearing on Tuesday, New York bankruptcy judge Cecelia Morris approved a Chapter 11 plan that will help wrap up the bankrupt Barneys estate’s remaining obligations to its creditors. 

The plan’s confirmation marks the resolution of many of the creditors’ objections of recent weeks, including those of the New York-New Jersey Regional Joint Board affiliated with Workers United, the union representing Barneys’ warehouse, sales and other employees. The workers had been seeking clarity on the severance payments they might receive, as well as payments for unused benefits. 

An attorney for Barneys from Kirkland & Ellis LLP said at the hearing that they would keep working with the union on the payments to employees. 

“On a personal note, we’ve worked extensively with the union and will continue to work with the union to deliver the best possible result we can,” Ben Winger of Kirkland told the court.  

Barneys has previously estimated 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. 

Melissa Woods of Cohen, Weiss and Simon LLP, who represents the union, described the negotiations as “difficult and disappointing” for the employees it represents, but told the judge that the union fought to secure “timely” severance payments, expected to be paid out over the next month or so, as well as other provisions.  

The union has also sought to preserve the working arrangements of current Fred’s restaurant employees, if the restaurant stays open, she said. 

“We are also hopeful that Fred’s restaurant will continue operations, and have worked to ensure that if it does so, under one management or another, it will do so with its current dedicated bargaining unit employees under conditions set by the relevant collective bargaining agreement,” she said. 

The Barneys proceedings, which began with its Chapter 11 filing in August, highlights the vulnerabilities of vendors and employees in these bankruptcy proceedings, where they often come last in the hierarchy of creditors who are owed repayment.  

Vendors, for one, could find more recourse by insulating themselves in advance through paperwork and arrangements with the retailer, rather than relying on courtroom resolutions, said Jeff Trexler, associate director of the Fashion Law Institute at Fordham University. 

“The Chapter 11 plan grew out of extensive negotiations outside of the courtroom — by the day the parties appear before the judge, everything outside of arcane legal questions can be a fait accompli,” he said. 

load comments
blog comments powered by Disqus