Barneys Finds a Potential Buyer in Bankruptcy Court

A group led by trade-show executive Sam Ben-Avraham is preparing a USD 220 million bid for retailer

By guest authors Suzanne Kapner, Juliet Chung and Soma Biswas from Wall Street Journal

A group of fashion executives is preparing a roughly USD 220 million bid to take control of Barneys New York Inc., according to people familiar with the situation, as the bankrupt retailer seeks to avoid a liquidation.

The group is led by Sam Ben-Avraham, who founded the hip New York retail store Atrium in the 1990s as well as the streetwear brand Kith, and also operates fashion trade shows. Mr. Ben-Avraham is assembling a consortium of retail veterans and brand investors to help fund the bid, the people said.

At a bankruptcy hearing on Thursday, October 3, 2019, Judge Cecelia Morris extended the deadline for bids until Oct. 11. Barneys’ lawyer said the retailer was in negotiations with a single buyer, but didn’t name the party.

“We are in advanced negotiations with a potential purchaser and intend to reach an agreement by next Friday,” a Barneys spokeswoman said in a statement.

Barneys filed for bankruptcy protection in August after the landlord of its Madison Avenue store nearly doubled the rent to USD 27.9 million. As part of its filing, it said it planned to shut most of its 13 department stores and nine warehouse stores, but would continue to operate seven locations, including on Madison Avenue.

Mr. Ben-Avraham’s bid is expected to include an asset-backed loan and cash with which to operate Barneys, one of the people said. But, it is unclear whether the loan has been secured or how much money the other members of the group are contributing. The talks could still fall apart.

A deal is expected to wipe out current equity owners, which include Perry Capital and Yucaipa Cos., people familiar with the bid said. It is also expected to include an agreement with the landlord of its Madison Avenue and Beverly Hills stores, one of the people said. The bid would be subject to approval by the bankruptcy court.

This is Barneys’ second foray into bankruptcy. Since emerging in 1999, it has changed hands several times. Richard Perry, who was Barneys’ biggest lender, took control of the company in 2012, in a debt-for-equity swap that narrowly averted another bankruptcy filing. He is winding down his hedge fund.