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Barneys Bankruptcy Judge Signs Off on Deal to ABG, But Time Remains for Rival Offers

On Thursday, a bankruptcy court approved Authentic Brands Group’s $271.4 million offer to acquire bankrupt Barneys New York, but the sale isn’t official until the deal closes and the clock expires, which could buy just enough time for hasty hopefuls to swoop in with a competing offer.

A rival bidder could keep Barneys’ stores open and workers in their jobs, as Sam Ben-Avraham said his consortium would in an open letter posted online earlier this month. However, if financing continues to be a problem for either David Jackson or the Kith backer and trade show operator, the next few hours won’t matter all that much.

The brand management firm and parent company to Bandolino and Jones New York is working with Barneys lender B. Riley Financial Inc., which on Wednesday said it had established a brand investment portfolio through its majority ownership of Bluestar Alliance, another brand management enterprise, in a transaction valued at $116.5 million.

Bluestar, which owns brands such as Catherine Malandrino, English Laundry, Kensie Girl, Limited Too and Nanette Lepore, is expected to close on its acquisition of the Hurley surfwear brand in December, and maintains a joint venture agreement with Bebe.

The Authentic Brands deal for Barneys is expected to close Friday morning.

Industry and financial sources said this week that the luxury retailer had been pinning its hopes for Ben-Avraham to come up with a new offer. His group missed the first deadline, which led to Authentic Brands emerging as the bidder to beat. And while Ben-Avraham did raise his offer in time for an auction deadline, his group failed to secure committed financing and thus never received “qualified” bidding status.

Industry sourced said that once the bid failed, one of the investors—Ron Burkle of Yucaipa Cos., and a minority stakeholder in Barneys at the time of its Chapter 11 filing on Aug. 6—elected to walk away from Ben-Avraham’s consortium.

Jackson, on the other hand, is the former CEO of Istithmar, a Dubai-based investment group that was a one-time Barneys owner. He’s said to be working with Arabian Oud, but is also believed to still need an extension to rally additional investors as he came up short on both time and money.

Presuming Authentic Brands closes Friday morning on the court-approved purchase, the brand management firm plans to liquidate all inventory and close all remaining Barneys stores. Select locations can still re-open at a later date, depending on how lease negotiations proceed, though the risk of permanent store closures, and the subsequent job losses, is high.