Barneys Considers Bankruptcy Financing Plans With Wells Fargo

Barneys New York Inc. is in talks with existing lenders including Wells Fargo & Co. about a new loan to keep the luxury clothing store in business if it decides to file for bankruptcy.

The chain is negotiating the terms of a debtor-in-possession loan that would finance operations while Barneys works out a deal in court with landlords and lenders, according to people with knowledge of the situation.

The discussions are in early stages, and Barneys is still exploring options that would keep it from filing for bankruptcy, such as partnerships, said the people, who asked not to be identified discussing a private matter. Management held meetings in Europe and Canada with potential buyers, one person said.

If Barneys does opt for bankruptcy, the court filing could come as soon as next week, and would be used to help the retailer refine its leases with landlords, the people said. The company has been hobbled by steeply rising rents as cash runs short and consumers defect to other outlets.

“We continue to work closely with all of our business partners to achieve the goals we’ve set together and maximize value,” a representative for Barneys said in an emailed statement. “Our board and management are actively evaluating opportunities to strengthen our balance sheet and ensure the sustainable, long-term growth and success of our business.”

A Wells Fargo representative declined to comment.

Previous Bust

Founded as a men’s retailer in 1923 in downtown Manhattan, Barneys became the icon of high fashion and innovation for women and men in the 1970s. It went bankrupt once before in 1996, after a falling out with a Japanese partner.

Today, Barneys New York operates flagship stores in New York City on Madison Avenue and downtown in Chelsea, as well as Beverly Hills, Chicago, Seattle, Boston, San Francisco and Las Vegas.

Barneys has around $250 million of debt obligations, including a $200 million asset-based revolver led by Wells Fargo and a $50 million term loan. The retailer is working with financial advisers at MIII Partners and restructuring lawyers at Kirkland & Ellis, Bloomberg previously reported.

Earlier this year, Barneys sought to downsize its Madison Avenue store to reduce the annual rent, which tripled this year, the people said. Barneys also started selling luxury cannabis products at its Beverly Hills outpost.

CNBC previously reported on efforts by Barneys to line up the bankruptcy financing.

--With assistance from Jordyn Holman.

To contact the reporter on this story: Katherine Doherty in New York at kdoherty23@bloomberg.net

To contact the editor responsible for this story: Rick Green at rgreen18@bloomberg.net

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.