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Authentic Brands Group Preps $270 Million Bid in Barneys Bankruptcy

Sam Ben-Avraham is out, and Authentic Brands Group is in.

In the quest to rescue Barneys from going bust, ABG has been waiting patiently in the wings, and now it is ready to swoop in with a $270 million bid to save the bankrupt luxury retailer from liquidation.

According to sources, the brand management firm would become the stalking horse bidder with a court auction date set for Oct. 24. Talks between ABG and Barneys are still ongoing, as are discussions with Ashkenazy Acquisition, the landlord of the Barneys flagships on Madison Avenue in Manhattan and in Beverly Hills. One source with some familiarity of the Ashkenazy talks said the landlord has been open to renegotiating the terms of the leases.

Jamie Salter, who heads up ABG, could not be reached for comment.

However, sources familiar with the talks said the plan is to license the Barneys name to Saks Fifth Avenue, and use that as the platform to host Barneys shop-in-shops in a select number of Saks doors. The licensing agreement with Saks also posits the retailer keeping the Barneys website going, another individual said.

It wasn’t immediately clear how many standalone stores ABG would keep open if it’s successful in its bid for Barneys. Unprofitable locations would wind down, while the plan is to maintain the doors that turn a profit, with Saks overseeing operations of the remaining store base. Ashkenazy is the landlord for at least two of the profit-generating locations.

Barneys filed for bankruptcy court protection on Aug. 6—its second tour of bankruptcy proceedings—and though word first surfaced in mid-July that the luxury department store was in trouble, the company’s troubles began earlier in the year.

An annual rent hike in January sent Barneys’ Madison Avenue rent to more than $30 million from $16 million after an arbitrator ruled that Ashkenazy could raise the monthly outlay to current market rates.

The luxury chain filed its first Chapter 11 petition in 1996, exited in 1999, and has changed ownership several times over the years.

Fashion trade show mogel and Kith investor Sam Ben-Avraham is believed to have tried to assemble financing for a Barneys bid as well. A Wall Street Journal report, which also first reported on ABG’s bid, said Monday that Ben-Avraham and his consortium couldn’t secure financing in time for Tuesday’s deadline.

Barneys is looking for a deal that’s valued at upwards of $220 million, the required baseline to cover the administrative claims and debt in the bankruptcy case.