Barneys New York Inc. is officially bankrupt.
The luxury specialty retailer filed a voluntary Chapter 11 petition for bankruptcy court protection in the wee hours of Tuesday morning. The petition was filed in a bankruptcy court in Poughkeepsie, N.Y. The company listed estimated assets at between $100 million to $500 million and estimated liabilities in the same range. Four other affiliates–Barney’s Inc., BNY Catering Inc., BNY Licensing Corp. and Barneys Asia Co. LLC–each filed petitions at the same time.
Daniella Vitale, chief executive officer and president, said, “Like many in our industry, Barneys New York’s financial position has been dramatically impacted by the challenging retail environment and rent structures that are excessively high relative to market demand.” She added that pursuing a “sale under the [bankruptcy court’s] supervision provides the quickest and most efficient means of maximizing value while ensuring we continue serving both new and loyal customers.”
Barneys has secured a $75 million debtor-in-possession facility from affiliates of Hilco Global and Gordon Brothers Group, which the bankrupt firm said will provide sufficient liquidity to meet business obligations in the “normal course” of operations. The two also have separate retail operating units that will help with inventory-related services and advise on asset monetization for stores closures.
The retailer will keep its Madison Ave. location open, as well as its doors in Chelsea in Downtown Manhattan, Beverly Hills, San Francisco and Copley Place in Boston, two Barneys outlets known as Barneys Warehouse in Woodbury Common and Livermore, as well as its Barneys.com and BarneysWarehouse.com operations. It will shutter stores in Chicago, Las Vegas and Seattle, five smaller concept stores and seven Barneys Warehouse locations, the company said.
Mohsin Meghji, managing partner at M-III Partners, was named chief restructuring officer of Barneys. A former workout consultant at Arthur Anderson, he was at one point the chief restructuring officer at Sears Holdings Corp. last year when that company filed its Chapter 11 petition in October.
The petition stated that Richard Perry’s Perry Capital LLC holds a 72 percent stake in Barneys, followed by Ron Burkle’s Yucaipa Cos., at 20 percent, and Dubai-based Istithmar, the former owner, at 8 percent.
The filing included a list of the Top 30 unsecured creditors. Of those creditors, two holding lease claims made the top five: Jenel Management, New York, N.Y., nearly $6 million, and Thor Equities, New York, N.Y., $2.2 million. Rounding out the top five were those holding trade claims: The Row LLC, New York, N.Y., $3.7 million; Celine Inc., New York, N.Y., $2.7 million, and Yves Saint Laurent America Inc., Secaucus, N.J., $2.2 million.
Among the remaining holders of unsecured claims in the Top 30 list were a Who’s Who of top designer apparel brands: Gucci, New York, N.Y., $1.8 million; Prada, New York, N.Y., $1.6 million; Azzedine Alaia, Paris, France,, $1.4 million; Margiela USA, Inc., New York, N.Y., $1.4 million; Moncler USA Inc., New York, N.Y., $1.2 million, Chloe, New York. N.Y., $995,965; Chanel, Piscataway, N.J., $887,516; Loewe LLC, New York, N.Y., $877,323; Canada Goose US Inc., Boston, Mass., $870,103; Manolo Blahnik USA Ltd., New York, N.Y., $831,984 and Rag & Bone, New York, N.Y., $823,234.
Word first surfaced that Barneys was close to a bankruptcy filing in mid-July. But troubles began much earlier. First at the beginning of the year when the company saw an annual rent hike in January to over $30 million from $16 million for its Manhattan flagship on Madison Ave., followed by late payments that saw many brands pull back on deliveries. In the last two months, factors pulled back on approvals, and by end of July, all shipments of new inventory stopped completely. Two weeks ago, the retailer failed to make payroll due to a reported “glitch” with a third-party service provider and had to manually cut checks for its staff.
Tuesday’s filing represents Barneys’ second tour of bankruptcy proceedings. The company filed its first Chapter 11 petition in 1996, and exited in 1999. Since then, the retailer has changed owners several times.