BY Fraser Tennant
In a move which threatens its almost 100-year history, US luxury department store operator Barneys New York filed for reorganisation under Chapter 11 of the US Bankruptcy Code.
As a part of the Chapter 11 process, Barneys New York will close its physical store locations in Chicago, Las Vegas and Seattle, in addition to five smaller concept stores and seven warehouse locations.
Alongside the bankruptcy process, the company has secured $75m in new capital which, combined with operating cash flow, will help it to meet its go-forward financial commitments, as well as facilitate a going concern sale process.
Well known for its high-end designer collection, Barneys New York has struggled in recent years with high rents and changing consumer tastes.
"For more than 90 years, Barneys New York has been an iconic luxury specialty retailer, renowned for its edit, strong point of view, creativity and representation of the world's best designers and brands," said Daniella Vitale, chief executive of Barneys New York. “Like many in our industry, Barneys New York's financial position has been dramatically impacted by the challenging retail environment and rent structures that are excessively high relative to market demand.”
“In response to these obstacles, the Barneys New York board and management team have taken decisive action by entering into a court-supervised process, which will provide the company the necessary tools to conduct a sale process, review our current leases and optimise our operations,” she continued. “While doing that we are receiving new capital to help support the business.”
Despite the store closures, Barneys New York will continue to serve customers in five flagship locations. In addition, Barneys.com and BarneysWarehouse.com will continue serving customers without disruption.
Serving as Barneys New York’s legal adviser is Kirkland & Ellis LLP. Houlihan Lokey is financial adviser, while M-III Partners, L.P. is restructuring adviser.
Ms Vitale concluded: "I would like to express my deep appreciation and profound gratitude for the continued support of our employees, vendor community and customers – truly the lifeblood of Barneys New York. We are unwavering in our commitment to executing our forward thinking vision on what retail should look like today."