Barneys New York filed a flurry of motions accompanying its Chapter 11 filing Tuesday, ahead of its hearing the same day before bankruptcy Judge Cecelia Morris in Poughkeepsie, N.Y. Many of those motions center around its financing plans to continue paying its employees and to keep the lights on to operate.
As is customary, Barneys also filed a debtor-in-possession financing motion, and its chief restructuring officer filed a first-day declaration laying out a narrative of the retailer’s troubled finances and detailing an ambitious exit strategy.
At Tuesday’s hearing, the judge is expected to approve some emergency funding to support Barneys’ operations in coming weeks while it finalizes financing. The court will likely convene again in a month or so for further financing approvals.
Barneys has indicated plans to close 15 of its 22 stores, but it will also have deadlines to decide whether to assume or reject the leases on its remaining stores. Companies in bankruptcy usually have around 120 days to make that decision, though they can also request a 90-day extension.
Meanwhile, the retailer’s proposed financing plan envisions a fairly quick exit in which it receives a favorable bid by Sept. 25 and closes the sale shortly after.
The sale process itself involves two main steps: Filing the sale and bid procedures motion, which would inform potential buyers about how to participate in an auction to buy the Barneys assets, whom to contact, how to qualify to bid on the assets, and so on.
After that, Barneys has to file the actual sale motion, which, according to its proposed time line Tuesday, would have to be filed by the end of September. But such lender-urged deadlines will be subject to negotiation and potential extensions as the case proceeds.
After the Chapter 11 filing, companies have a so-called exclusivity period of roughly 120 days to file a plan of reorganization, though they can keep filing motions to extend this exclusivity window so long as they can show good reason for it.
If the Barneys assets are sold successfully, the old company that remains will start winding down by using proceeds from the sale to pay off claims filed by creditors and vendors. The process could take a year or two after the sale.