Barneys, Near Death Days Ago, Juggles Multiple Rescue Bids
(Bloomberg) -- The first hearing in the bankruptcy of Barneys New York Inc. started off with a bang Tuesday as the luxury retailer disclosed it had received a rescue proposal moments earlier that would compete with the tentative deal it had in place.
Lending arms of B. Riley Financial Inc. and Brigade Capital Management teamed up ahead of the hearing to craft an offer challenging the $75 million package Barneys had when it filed for bankruptcy early Tuesday, Josh Sussberg, an attorney for Barneys, said in court. The previously announced offer came from affiliates of Hilco Global and Gordon Brothers Group.
Judge Cecelia G. Morris said at the hearing in Poughkeepsie, New York that she'd approve Barneys' request to go with the offer from B. Riley and Brigade, and allow the company to tap $75 million of the $218 million package, most of which will be used to repay outstanding debts. The retailer will ask for permission to draw about $140 million more next week, which will be used to pay off the rest of the company's secured debt, attorneys for Barneys said in the hearing.
Seeking Buyer
The new proposal also provides Barneys more time to market the business than the plan from Hilco and Gordon Brothers would have. Both proposed loan packages aimed to keep Barneys open in bankruptcy while it seeks a buyer. Bloomberg earlier reported the involvement of B. Riley's Great American Capital as a potential lender.
“B. Riley and our partners were pleased to offer financing terms to Barneys that allow it the appropriate amount of time to secure a going-concern bid,” Perry Mandarino, B. Riley's senior managing director, said in an interview Tuesday.
Still, a buyer has yet to emerge, according to Sussberg of law firm Kirkland & Ellis LLP.
“We do not have a white knight as we stand here right now,” he said in court. “We are in a full-fledged battle” as advisers work to find a bidder who would keep Barneys alive, he added. “There have been more twists and turns than I can imagine.”
Preliminary plans call for closing many of Barneys stores and running a slimmed-down chain. At one point in the slide toward bankruptcy, the company's existing lenders had favored shutting down the chain entirely, according to court papers.
Slimmed Down
While B. Riley has a liquidation unit, Barneys financial adviser Saul Burian of Houlihan Lokey stressed in court that going out of business was not the focus of the company or its new lenders.
“We didn't kill ourselves the last four days to liquidate Barneys,” Burian said.
Authentic Brands Group LLC is one party in discussions with the retailer to potentially purchase assets including the Barneys brand and trademarks.
“A company that only days ago stared down the barrel of a gun and a potential liquidation” is now the potential recipient of more than $200 million of financing, Sussberg said.
--With assistance from Boris Korby.
To contact the reporters on this story: Eliza Ronalds-Hannon in New York at eronaldshann@bloomberg.net;Jeremy Hill in New York at jhill273@bloomberg.net;Katherine Doherty in New York at kdoherty23@bloomberg.net
To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, Nicole Bullock
©2019 Bloomberg L.P.
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