Barneys New York‘s fate continues to hang in the balance.
The luxury retailer was scheduled to receive bids on Tuesday from potential buyers to pull it out of bankruptcy, followed by an auction on Oct. 24. But an application to extend the bid filing deadline has now pushed the auction to Oct. 28, and the bankruptcy court will conduct a hearing on Oct. 31 to consider whether a Barneys sale to the successful bidder should be approved.
Barneys has already found a stalking-horse bidder in Authentic Brands Group and B. Riley Financial. According to documents filed with the U.S. Bankruptcy Court in the Southern District of New York, the retail chain had entered into an agreement to sell its assets to the brand management company and investment banking firm.
However, a number of parties have expressed their interest in purchasing the company, including fashion trade executive and Kith investor Sam Ben-Avraham, who over the weekend launched a public campaign centered around raising capital to complete his bid for the retailer.
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“My team and I believe we can do better. We can do better for the business with our vision: We’ll bring back the brand you’ve come to know and love and make it commercially viable for the future. … We have a solution that doesn’t involve mass layoffs and store closures,” Ben-Avraham wrote in a letter posted on the site SaveBarneys.com, which invited additional investors to join him in his offer. As of last week, his patrons included brother and real estate developer Uzi Ben-Avraham, Intermix founder Khajak Keledjian and supermarket magnate and Barneys investor Ron Burkle.
Footwear designer Steve Madden is also reportedly putting together an eleventh-hour bid for Barneys, but it remains unclear who was partnering with him for the offer. FN has confirmed that his investment would be separate from his publicly traded company.
More recently, reports have surfaced that former Istithmar CEO David Jackson would submit a proposal to snap up the retailer. The Dubai-based investment firm bought Barneys for $942.3 million from Jones Apparel Group in 2007 and relinquished ownership to Perry Capital in 2012. Jackson is said to be engineering a bid that would outdo ABG’s roughly $271.4 million cash offer.
As part of ABG’s deal, all of Barneys’ seven stores could be slated for closing, including its storied Madison Avenue flagship that spans 265,000 square feet and 10 floors. The luxury department store also has two other locations in New York, as well as three in California and one in Boston. The 12 stores it licenses in Japan under a franchise agreement will remain untouched.
As with the roughly 50 other businesses under its large and growing umbrella, ABG has said it plans to run the Barneys digital operations but will license the Barneys name to Saks Fifth Avenue, which is expected to create private-label merchandise and build shop-in-shops within some of its locations.
However, attorney Charles Klein, partner at Davidoff Hutcher & Citron LLP and chair of the firm’s fashion law practice group, told FN that there are likely bigger things in the works should ABG cinch Barneys in the end.
“If you look at their business model, ABG has mainly been an acquirer and licensor,” he said. “They’re big thinkers, and they’re very good at transforming brands. I would be surprised if they’re really going to spend more than $270 million just to put Barneys in Saks stores.”
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