BARNEYS GETS INTO ANOTHER COURT FIGHT

NEW YORK — Barneys New York has another legal battle on its hands.
This time, it’s up against the landlord of one of the buildings that comprises the Barneys store on Seventh Avenue between 16th and 17th Streets here.
The landlord, Treger Realty, wants Barneys to vacate by March 31 the 16th Street side of the store, which contains 16,000 square feet. The lease expires on that date, and Loehmann’s is due to move in the next day.
Barneys, which is renovating on the 17th Street side of the block, says it wants to leave the 16th Street side prior to the end of the month but delays in construction could force it to remain there a few days into April. After vacating, Barneys will be left with a 60,000-square-foot operation. At a court hearing Wednesday, an attorney for Treger asked Bankruptcy Judge James Garrity Jr. to impose a penalty on Barneys for each day it remains in the store after March 31.
“Unless there is an incentive for Barneys to leave, it will not,” said Mark Frankel, of Backenroth & Grossman, attorneys for the landlord.
John Campo, of LeBoeuf, Lamb, Greene & McRae, counsel to Barneys, countered that it would be unfair to decide what penalties to impose on the retailer before establishing that it won’t vacate the premises by March 31. “Let’s come back after March 31” and reevaluate the situation, Campo suggested.
Judge Garrity seemed to agree with Campo, adjourning the hearing until April 1. “If [Barneys] is not out by the 31st, we know we have a problem that we’ll deal with on April 1,” the judge said.
Barneys paid only $12,000 a month in rent for the space that Loehmann’s will be occupying for $83,000 a month, according to testimony given at the hearing.
Separately, Barneys is asking for bankruptcy court approval to relocate its Woodbury Common outlet store, and open another outlet in Dawsonville, Ga.
Barneys, currently operating 14 stores and six outlets in 11 states, said in court papers that the proposed sites “represent an opportunity for increased profitability with low risk that will not be available in the near future.”
The retailer said its new 7,400-square-foot location in Woodbury Common would have “significantly better co-tenants, including Polo, Donna Karan, Calvin Klein and Ellen Tracy.”
In addition, Barneys said stores in the location it wants to move into have average sales per square foot of between $700 and $2,000. By comparison, the average store in its present location takes in sales of between $300 and $800 per square foot.
Barneys’ proposed Georgia outlet, 43 miles north of Atlanta, will have 7,500 square feet and will be in an area called the North Georgia Premium Outlet Center, according to court papers. It is scheduled to open on May 7.
The outlet will be strong, Barneys said, considering the other tenants there, including Saks Off Fifth, Donna Karan, The Gap, Ellen Tracy and Tahari.
Barneys estimated that it can make up its $312,000 investment in the new Woodbury store in about five months. The $669,000 investment Barneys is making in the Georgia outlet will be returned in seven months, Barneys said.
A hearing to approve the moves is set for March 22.

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