U.S. luxury department store chain Barneys New York Inc. filed for chapter 11 protection today and put itself up for sale after facing soaring rents and failing in its earlier attempts to find a buyer for the cash-strapped retailer, Reuters reported. Barneys secured $75 million in new financing from affiliates of Hilco Global and the Gordon Brothers Group to help it keep operating as it navigates the bankruptcy court, it said in a statement. The retailer will close its physical stores in Chicago, Las Vegas and Seattle, along with five smaller concept stores and seven Barneys Warehouse locations. Barneys for weeks has been searching for a buyer or an investor, grappling with a crisis due to a steep hike in rent at its Manhattan flagship store on Madison Avenue to roughly $30 million from $16 million. Barneys listed assets and liabilities in the range of $100 million to $500 million in the voluntary chapter 11 document filed in the U.S. Bankruptcy Court for the Southern District of New York. Barneys filed for bankruptcy once before, in the late 1990s, and also completed a more recent debt restructuring outside of court proceedings in 2012 that handed ownership to a hedge fund run by financier Richard Perry and an investment firm founded by supermarket magnate Ron Burkle. Read more.
Occupancy issues are at the heart of many significant retail cases, as detailed in the ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available at the ABI Store.
