By Sindhu Sundar
with contributions from Miles Socha
 on October 30, 2019
A pedestrian reflect in a store window at Barneys department store, in New York. The luxury retailer could be joining a growing list of retailers that have filed for bankruptcyBarneys -Options, New York, USA - 16 Jul 2019

Sam-Ben Avraham plans to submit another bid to buy Barneys New York, and potentially compete with the $271.4 million stalking-horse bid led by Authentic Brands Group and B. Riley Financial, according to sources familiar with the matter. A sale hearing is scheduled for Thursday.

The Kith backer had previously submitted a roughly $260 million bid to buy Barneys as a going concern that would keep at least five Barneys locations open, including its Madison Avenue and Beverly Hills flagships. Although he submitted that bid in time for a planned auction, it failed to make the cut as a qualifying bid, and the auction was canceled.

Details of his new potential bid were not immediately clear, but one source said Ben-Avraham has worked to improve his offer in part by firming up the financing on the deal, including equity commitments.

A representative for Barneys could not immediately be reached for comment Wednesday, and a representative for B. Riley declined to comment. 

On Wednesday, the official committee of unsecured creditors, which comprises vendors including Prada and Chloé, landlords, and an employees union, appeared to signal its support for a potential bid by Ben-Avraham that would promise to preserve jobs, or by anyone who can submit a higher or better offer than ABG’s bid. 

“It is mindful that bankruptcy is intended to preserve value and jobs for all stakeholders, and not just for certain creditors who may sit at the top of the capital structure,” the committee wrote in a court filing.

ABG plans to liquidate the inventory at Barneys’ stores while deciding whether to keep any stores open and perhaps remerchandise them. The licensing company has said it plans to develop Barneys into a “global luxury retailer and lifestyle brand.” Part of the plan would involve installing Barneys shop in shops at Saks Fifth Avenue stores, ABG has said.  

This plan appears to have its detractors. The creditors committee has described ABG’s efforts as a “liquidation bid” that could likely result in store closures and employee layoffs. Barneys has previously issued notices to employees that they could be laid off in November. Such notices are generally required by the federal Worker Adjustment and Retraining Notification Act, and don’t necessarily mean employees will be laid off, especially if Barneys can secure a buyer who will promise to keep stores open, an attorney for the union representing Barneys employees previously told WWD. The union represents some 800 Barneys employees, including salespeople, clerks, tailors and warehouse workers.

On Wednesday, the creditors committee reiterated its desire to see Barneys sold in a going-concern sale, and emphasized that it would still assess any bid submitted before Thursday’s sale hearing. 

“From the outset of these cases, the committee has been pushing to keep Barneys alive as a true going-concern business with a maximum retail footprint because that would inure to the benefit of the thousands of employees — many who live paycheck to paycheck, hundreds of vendors, and the several landlords — as well as the thousands upon thousands of customers who visit Barneys not just for shopping, but for an experience, be it seeing the artistic displays, eating at the beloved Freds, or finding new and emerging brands,” the committee said in its filing.

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