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Barneys, Racing to Avoid Liquidation, Now at Odds with Lenders

Submitted by jhartgen@abi.org on

A dispute has erupted between Barneys New York Inc. and its lenders ahead of a Friday deadline for the retailer to produce an acceptable bid for its assets, WSJ Pro Bankruptcy reported. Barneys has been seeking an extension of the deadline while bidders, including a group of fashion executives and brand investors led by Sam Ben-Avraham, continue to negotiate potential terms. But disagreements have cropped up over some terms of the company’s $217 million financing package from B. Riley Financial Inc. and Brigade Capital Management LP, according to court papers filed this week. Among them, the lenders want Barneys to pay a 2 percent fee before making certain priority payments called administrative expenses, such as legal fees. The company said in a filing yesterday that the lenders are threatening it with potential liquidation. Multiple potential bidders are conducting due diligence, and if Barneys can finalize a deal with a lead bidder by midnight Friday, its advisers will work to develop competing offers ahead of an auction on Oct. 24, the company said yesterday. Barneys said that the lenders are using the approaching deadline to pressure the company so they “can be in a position to force a liquidation if there is even the slightest of foot faults.”