Following weeks of news Barneys was struggling to meet its financial obligations, the near-100-year-old luxury retailer Barneys has declared bankruptcy and will close most of its stores.
The chain officially filed for Chapter 11 bankruptcy protection early this morning (August 6, 2019) in the Southern District of New York where it listed more than $100 million in debt and more than $100 million in assets.
The retailer has also obtained $75 million in funding from affiliates of Hilco Global and the Gordon Brothers Group to help pay off financial commitments. In the meantime, Barneys continue to seek a buyer.
In a statement, CEO Daniella Vitale said, “Like many in our industry, Barneys New York’s financial position has been dramatically impacted by the challenging retail environment and rent structures that are excessively high relative to market demand.”
Stores that will likely remain open include its two New York locations, plus its stores in Boston, Beverly Hills, San Francisco plus two Barneys Warehouse stores in Woodbury Common in New Jersey and Livermore in San Francisco.
Barneys is not new to bankruptcy. It first filed in 1996 over a dispute with its then owner, Japanese department store Isetan over rent rates.
The chain managed to stave off avoid bankruptcy in 2012 when Perry Capital took control over the company with a $540 million debt-for-equity exchange, according to CNBC. While the fund still owns Barneys, it no longer invests money in it.
The company’s biggest money-making locations on Madison Avenue in New York and in Beverly Hills are owned by Ashkenazy Acquisition, which bought the properties store from Isetan in 2011. Ashkenazy’s purchase agreement included had the right to raise the rent on both properties in 2019. Barneys unsuccessfully attempted to fight off the increase with rent on the Madison Avenue store ultimately jumping from $16 million a year to $30 million.