Barneys’ Sale to ABG Approved by Court; Deal Expected to Close Friday

Barneys New York’s sale to stalking-horse bidder Authentic Brands Group and B. Riley Financial Inc. has been approved in bankruptcy court. But there is still time for another bid to emerge before the deal closes tomorrow morning.

In an email to FN, Joshua Sussberg, a Kirkland & Ellis lawyer representing the luxury retailer, confirmed the judge’s decision during today’s sale hearing. The deal is scheduled to close at 10 a.m. on Friday.

On Oct. 16, according to court documents, Barneys had entered into an agreement to sell its assets to ABG and B. Riley in a cash deal estimated at roughly $271.4 million.

As part of this court-approved transaction, the brand management company intends to shutter all of the retailer’s seven existing stores, including the Manhattan flagship on 660 Madison Avenue, and license the name to Saks Fifth Avenue, which will create private-label merchandise and build shop-in-shops inside some of its locations. ABG also plans to grow Barneys’ presence through high-fashion collaborations and namesake products, as well as expand it in key international markets, particularly in Asia, where it would be able to build on the success of the chain’s stores in Japan.

Other parties had also conveyed interest in purchasing the company, including fashion trade executive and Kith investor Sam Ben-Avraham, who had been corralling a team of investors in an attempt to purchase the department store chain out of bankruptcy.

Ben-Avraham’s going-concern bid sought to keep open at least five flagship stores, two outlets and the distribution center, as well as save thousands of jobs and hundreds of vendor partnerships. However, in a filing yesterday, Barneys’ unsecured creditors’ committee stated his proposal was “neither a higher nor better bid” than that of ABG and, thus, could not be deemed a qualified bid.

“Other bidders can still come forward before tomorrow’s closing,” a spokesperson for Barneys told FN today. “Over the past several months, we have worked diligently with the court, our lenders and creditors to maximize the value of Barneys in this sale process, and we continue to work with all relevant parties towards the best solution for Barneys’ employees, designers and vendors, and customers.”

ABG has declined to comment until the sale is complete. Ben-Avraham did not immediately respond to FN’s request for comment.

Barneys filed for Chapter 11 bankruptcy protection more than two months ago, but it managed to secure $218 million in financing that allowed it to maintain operations. The retailer has struggled amid skyrocketing rents and shifting consumer demands that have weighed heavily on its margins, particularly in Manhattan, where the Madison Avenue flagship has stood for nearly a century.

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