By
with contributions from Sindhu Sundar
 on August 7, 2019
Signage for Barneys

There’s new financing for Barneys New York, as the bankrupt luxury chain disclosed late Tuesday night that it secured about $218 million from Brigade Capital Management LP and B. Riley Financial Inc.

The company also received approvals from bankruptcy court for all of its “first-day” motions filed on Tuesday, giving Barneys interim approval to immediately access $75 million of the $218 million in new financing.

The deal for the debtor-in-possession financing materialized earlier in the day during Barneys’ first day in bankruptcy court in the Southern District of New York’s Poughkeepsie’s office. It replaces the previously revealed $75 million agreement with affiliates of Hilco Global and the Gordon Brothers Group. Barneys said the new financing will refinance all existing secured indebtedness, and combined with its operating cash flow, will help meet its go-forward financial commitments and help it continue operations.

“This significantly enhanced financing commitment demonstrates the belief of Brigade Capital and B. Riley Financial in the value of the Barneys New York brand and business,” said Barneys chief executive officer Daniella Vitale. “We appreciate the prompt action by the court in approving our first-day motions and would like to thank our employees, vendors and customers for their continued support.”

See Also: What’s Next for Barneys After Bankruptcy?

Brigade Capital is a global investment management firm, and B. Riley Financial is a diversified financial services company.

Vitale continued, “I would also like to thank Hilco Global and the Gordon Brothers Group for their interest and professionalism. The competition to provide Barneys New York with fresh capital — a substantial amount of which is being provided on a junior basis — reinforces our confidence in achieving a value enhancing transaction.”

As reported, Barneys filed for Chapter 11 bankruptcy early Tuesday morning after several seasons of declining traffic and sales, operating stores in communities where there’s a dearth of interest in Barneys’ unique brand of fashion, and more recently, steep rent increases at the Madison Avenue and Beverly Hills flagships. The company laid out an aggressive timeline for its restructuring, requiring someone to step in to acquire the business by the end of September, even though it doesn’t have a potential buyer lined up yet.

“The sale process is going to find us a third-party white knight,” Barneys attorney Joshua Sussberg of Kirkland & Ellis told Judge Cecelia Morris during the hearing on Tuesday. “We just received additional financing that gives us the liquidity and runway to run a sale process.”

While Barneys did firm up its new financing, it still requires a final approval from Morris, who has scheduled the next hearing in the case for Aug. 14.

See Also: Barneys Bankruptcy Has Social Media Buzzing

Barneys also now plans to close 15 of its 22 stores, while continuing to operate five of its flagships: Madison Avenue, 17th Street in the Chelsea section of Manhattan; Beverly Hills; San Francisco, and Copley Place in Boston, as well as two warehouse locations in Woodbury Common in Central Valley, N.Y., and San Francisco Premium Outlets in Livermore, Calif. In addition, barneys.com and barneyswarehouse.com will continue operating, the company said.

In the past year, Barneys signed two leases for two future stores, at the American Dream entertainment and retail complex in East Rutherford, N.J., and at Bal Harbour Shops in Miami. With the bankruptcy proceedings involving a review of leases and locations, it’s highly unlikely those projects at American Dream and Bal Harbour move forward.

In addition to the interim approval to access its new financing, the court granted Barneys the authority to continue payment of employee wages and benefits and honor customer payments and orders. The company will pay trade vendors, manufacturing partners and suppliers for goods and services provided on and after the Aug. 6 filing date.

Read More: Barneys Through the Decades

The bankruptcy process should enable Barneys to get out of underperforming stores, such as those in Philadelphia, Las Vegas and Seattle, or perhaps, receive some rent reduction from Ashkenazy Acquisition Corp., which owns the Madison Avenue flagship building and the store in Beverly Hills.

Barneys management hopes the bankruptcy process means a brighter, profitable future in a pared down state. The luxury chain does engender much loyalty among vendors and shoppers and Barneys was able to emerge from its first bankruptcy in the late Nineties. Retail experts said this week that an outright Chapter 7 liquidation still looms as a possibility.

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