Several Barneys New York workers are taking legal action, citing concerns over their future livelihoods post-liquidation.
In a letter filed last week in Poughkeepsie bankruptcy court, employees at the retailer’s flagship store in Manhattan — some of whom have said they worked as associates for more than two decades — wrote to the judge overseeing the bankruptcy case that they have been kept “completely in the dark” about the liquidation company’s future plans, including the store’s closing date as well as their severance pay and benefits.
“We hope that making the court aware of what has been happening in what has become a disastrous execution of the liquidation and our wellbeing will help in some way,” read the letter by the group, led by Barneys employee Anthony Stropoli.
Liquidators Great American Group, a subsidiary of investment banking firm B. Riley Financial, and Tiger Capital Group control of sale of Barneys’ remaining inventory. (Together, the firms have previously been hired to wind down operations for numerous bankrupt retailers in recent years, including Payless ShoeSource, Bon-Ton Stores and Gymboree.) In the letter, the employees said that they have not received answers to inquiries about their futures, “causing tremendous levels of distress as we try to now plan our futures for ourselves, our families and loved ones.”
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“The company has treated us so disrespectfully and seem to be hoping we will just walk away because of the mental stress they are inflicting,” they wrote, adding that some long-term workers have opted to forego their severance pay and leave the company “to preserve their mental health.”
In the court filing, the employees are asking the company to commit to an end date for their employment; guarantee pensions, severance and payout on unused benefits; and provide proper security to ensure our physical safety. It also asked the company to provide clarity for the goals set for payouts — adding that it did not expect liquidation firm Great American Group to hit its sales targets of at least $300 million due to merchandise markdowns, which would have contributed an additional $2 million to the severance fund.
In a separate filing on Tuesday, Barneys included a memorandum sent to employees in which it said that it had funded $2 million to pay an estimated $4 million in severance obligations, with about $800,000 already paid out.
“The company does not believe there will be sufficient cash available to satisfy all severance obligations in full,” it wrote. “Further, based on available information as of the date hereof, the company does not believe that the purchasers will achieve the sales targets that would result in additional funds being set aside by the purchasers to satisfy employee severance obligations.”
On Nov. 1, the bankruptcy judge, Cecilia G. Morris, oversaw the closing of Barneys’ sale to Authentic Brands Group, which outlined plans to shutter the retailer’s seven existing stores, including the 660 Madison Avenue outpost. ABG is currently running a sale with B. Riley until the end of February.
After it winds down liquidation sales in the store, ABG has said that it will shut down the Madison Avenue location for a few weeks to transform the space into “a pop-up retail experience” that will include “boutiques, art and cultural installations and exhibits and entertainment.” (ABG has also joined forces with Saks Fifth Avenue, where Barneys will live on the fifth floor of Saks’ newly renovated flagship in New York City as well as launch shop-in-shops in key Saks markets.)
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