Skip to main content

The Week Ahead: The Future of Barneys and Brexit

With a stalking horse in hand, bankrupt Barneys New York could be headed to a court auction on Thursday provided other bidders line up on Tuesday. And overseas, possibly as soon as this weekend, the world will learn the future and fate of the latest agreement in principle on Brexit.

Barneys New York: Clearly the future of Barneys is at stake, but with a preferred bidder in the form of Authentic Brands Group, at least the luxury chain’s iconic name in all likelihood won’t be relegated to the retail graveyard. According to documents filed with a Manhattan bankruptcy court this week, Authentic Brands and Barneys’ lender B. Riley Financial Inc. have agreed to a $271.4 million bid for the bankrupt luxury department store retailer. The brand management firm, parent to Herve Leger and Misook, among others, is also planning to license the Barneys name to Hudson’s Bay Co.’s Saks Fifth Avenue for shop-in-shops in select Saks doors.

But what about the stores that haven’t shut down as of yet? That depends on whether anyone enters the fray to submit an offer that outdoes ABG’s bid, which gives the brand management firm the lease rights to the stores, which means they could remain open if certain lease terms with landlords can be renegotiated. Sources said those talks are still in progress.

The deal contemplates that Great American would first liquidate all existing inventory in the stores over the holiday period, and then those doors would be shuttered. If renegotiated lease terms can be finalized with landlords, those stores would then reopen with new inventory.

Related Stories

Anyone wanting to bid at auction needs to provide notice of intent by 5 p.m. ET on Tuesday. Barneys could be hoping that trade show operator and Kith investor Sam Ben-Avraham and his consortium will secure the requisite financing in time to make an offer because his plan is to keep the stores open–a move that has the added benefit of saving jobs. Though Ben-Avraham’s initial plan involved a $220 million offer, now his group will have to bid at least $279.5 million to top the Authentic Brands agreement because of an $8.1 million break-up fee and expense reimbursement. And if his group does, a bidding war could break out if Authentic Brands elects to counter with an even higher offer.

Brexit: U.K. Prime Minister Boris Johnson earlier this week secured an agreement with the European Union in which a border will not be installed on the island of Ireland. That was a key stumbling block to a Brexit deal because Northern Ireland is part of the U.K., while Ireland is not. But the verbal compromise, which still needs to be drafted into a formal agreement, isn’t exactly a done deal.

While the EU leaders on Thursday approved of the deal, it still needs the approval of Britain’s Parliament. Lawmakers are expected to debate the deal’s pros and cons, and could put the matter to a vote on Saturday. Johnson is said to be making the rounds trying to raise support for deal. If lawmakers vote no, Johnson will have to request another Brexit extension. The U.K. is slated to leave the EU on Oct. 31.