Creditors of Barneys New York Inc. said Authentic Brands Group’s offer to buy the luxury retailer out of bankruptcy is really a “liquidation bid” that would eliminate most of the company’s 2,000 employees, WSJ Pro Bankruptcy reported. A rival bid from a group led by retail veteran Sam Ben-Avraham would keep at least five Barneys stores open, but it was neither higher nor better than Authentic Brands’ bid by the time of the bid deadline last week, lawyers for the official creditors’ committee said in court papers filed yesterday. Barneys last week decided that the bid from Ben-Avraham’s group didn’t qualify as a competing offer and canceled an auction for the retailer that would have pitted the two bidders against each other. Authentic Brands teamed up with investment firm B. Riley Financial Inc. to take the Barneys name while eliminating most of its employees and liquidating its stores through B. Riley affiliate Great American Group, the unsecured creditors’ committee also asserted. Read more.
In related news, even some of the world’s toniest luxury-makers are speaking up on behalf of workers threatened by store closures, Bloomberg News reported. Their concern is highlighted in a court statement from a group of Barneys New York Inc. creditors, which include high-end brands like Gucci and Prada, in support of a bid that would keep more of the bankrupt retailer’s existing stores open. Preserving those outlets “would inure to the benefit of the thousands of employees — many who live paycheck to paycheck,” not to mention vendors, landlords and customers, according to the document filed Wednesday by the official committee of unsecured creditors. Concerns about workers displaced by retail bankruptcies and liquidations have gained prominence since former employees at Toys “R” Us Inc. organized to demand promised severance pay after that retailer collapsed. The group caught the attention and support of prominent lawmakers, including presidential candidates and Sens. Elizabeth Warren (D-Mass.) and Cory Booker (D-N.J.). While bankruptcy auctions typically are won by the highest bidder, the Barneys creditors argued that “societal needs — such as preservation of employee jobs — are an appropriate consideration in weighing competing offers.” Read more.