BARNEYS CREDITOR GETS 38%
Byline: Rich Wilner
NEW YORK — Republic National Bank, the second-largest unsecured creditor in Barneys Inc.’s Chapter 11 case, sold its $25.1 million claim for a reported 38 cents on the dollar.
The sale, by far the largest transfer of debt in the two-month-old Chapter 11 case, raised eyebrows in the distressed securities industry because the price was about 13 cents higher than the 25 cents on the dollar being paid for much smaller pieces of debt.
The buyer of the claim was unknown. Republic National Bank confirmed the sale Thursday, but refused to comment on who purchased the claim, or when.
One securities analyst said he was surprised at the price because of the lack of financial information, which is usually vital to placing a value on such claims.
“Either the buyer has information that nobody else in the industry seems to have, or they have much more confidence, if you can call it that,” the analyst said.
Trade claims in the Barneys Chapter 11, filed Jan. 10, began selling in the 50-cent range early on, but quickly headed down into the low to mid-40s and then through the 30s to the high 20s. Recent quotes on trade claims ranging from $50,000 up to $200,000 were in the 25-cents-on-the-dollar neighborhood.
According to market reports, The CIT Group/Commercial Services Inc. sold its $660,000 claim last week for about 30 cents. Typically, the price paid for claims is based on the size of the claim; larger claims fetch higher prices. CIT Group declined to comment.
Barneys has filed papers in Bankruptcy Court here seeking permission to hire John P. Brincko, a 17-year veteran of corporate restructurings, as a senior Chapter 11 restructuring officer.
Brincko’s hiring is expected to meet with little or no opposition and will be made official without a hearing, according to people close to the case.
Brincko is expected to be Barneys’ point man when it meets with Stephen Case, the court-appointed mediator, to resolve its rent dispute with Isetan Co. Ltd., Barneys’ global business partner.
Barneys has objected to the overall makeup of its business relationship with Isetan. It insists Isetan’s $587 million in investments in Barneys since 1987 were equity investments and therefore, beginning in January 1996, refused to pay rent to the Tokyo-based department store giant.
Isetan claims the investments were, in part, for real estate and asserts it is the owner of Barneys’ three flagship stores — on Madison Avenue here, in Chicago and in Beverly Hills. Barneys had paid Isetan $50 million in rent in 1994 and 1995.
Barneys and Isetan have called a truce until April 19 in the rent dispute. The two companies and mediator Case are expected to meet in the next couple of weeks to begin talks to settle the rent issue. — Fairchild News Service