(Bloomberg)—Authentic Brands Group LLC won court approval to become the new owner of bankrupt Barneys New York Inc. with plans to license the brand and close most of the chain’s stores. Barneys is No. 196 in the Internet Retailer 2019 Top 1000.
The ruling came on Thursday after lawyers for Barneys told federal bankruptcy court Judge Cecelia Morris that Authentic was the only qualified bid by the time of Thursday’s hearing in Poughkeepsie, New York. Would-be rivals repeatedly failed to submit credible bids by previous deadlines, but the company said there’s still time before Friday’s scheduled closing for a last-minute offer.
Authentic’s plan involves hitching the chain to another iconic retailer, with about 40 Barneys shops opening inside of Saks Fifth Avenue stores (owned by Hudson’s Bay Co., No. 41). The chain may also have some free-standing locations, including one in Boston and a new site in Greenwich, Connecticut.
The $271 million Authentic offer met resistance from Barneys’ unsecured creditors, who called it a liquidation bid that would hurt workers, vendors and customers. The group, which included labels like Gucci and Prada, had urged the court to work with a buyer that would keep Barneys stores open, such as entrepreneur Sam Ben-Avraham.
But Ben-Avraham’s consortium missed the deadline that would have prompted an auction earlier this month, and he didn’t submit anything before Thursday’s decision.
A lawyer for the creditors group at the hearing called Authentic’s offer “devastating,” and said parties including Ben-Avraham and David Jackson, head of an investment group that formerly owned Barneys, wanted more time to assemble a bid. But Richard Chesley, an attorney for Authentic, said the sale had been fair and open, and it was time for the process to end.
“Earlier today, the court approved the sale of Barneys New York to Authentic Brands Group, in partnership with Saks,” a Barneys representative said in an emailed statement. “Importantly, the sale has not concluded and other bidders can still come forward before tomorrow’s closing.”
The parties worked around the clock toward “preserving a going concern and keeping jobs and stores open, viable, available for employees, for landlords, for trade vendors,” Barneys attorney Joshua Sussberg of Kirkland & Ellis LLP told the court. But even with the possibility of some stores remaining, most will likely close along with distribution centers, resulting in the loss of thousands of jobs, he said.
“That is the reason why we have continued to entertain discussions and conversations with various other parties,” he said.
Sussberg said the various parties were talking among themselves, including Jackson and Tengram Capital Partners. The private equity firm, which focuses on investments in the consumer and retail sectors, was co-founded by William Sweedler in 2011. Sweedler was previously the CEO of the Joe Boxer division at Iconix Brand Group, another firm specializing in brand licensing, according to a regulatory filing.
“This is what we call a Hail Mary,” said a lawyer for Jackson. “They are here, they are working hard, but are not there yet.”
For Authentic, owner of fashion, celebrity and media brands including Nine West and Sports Illustrated, the win would add a marquee name with a storied New York history.
Barneys filed for bankruptcy in early August, felled by rivals and rising rent costs. The Chapter 11 case has allowed the department-store chain to stay open as it seeks to sell a slimmed-down business and negotiates with its landlords.Favorite