Barneys, Past Its Bankruptcy Deadline, Holds Out Hope For Another Bid

It was a dark and stormy morning... So begins the ultimate Halloween retail story! Would Barneys New York, currently in bankruptcy proceedings, rise from the dead, with a successful bid from Sam Ben-Avraham? Or would it enter the afterlife of liquidation under Authentic Brands Group (ABG)? Thursday morning, when all bids were due, should have brought this all to a close.

But first, there was a twist. The New York Post reported Thursday morning, less than an hour before the auction began, that Ben-Avraham would not submit a bid in time for the Thursday morning auction. Ben-Avraham, the Kith backer behind the #SaveBarneys campaign, did not return a request for comment.

Another twist⁠ came in the 10:30 A.M. hearing. Joshua Sussberg, a Kirkland & Ellis lawyer representing Barneys, said that the firm was prepared to move ahead with ABG in a deal closing tomorrow morning, worth about $270 million, but was holding out hope that a deal that would keep Barneys open, as a going-concern, would materialize before then.

Sussberg outlined that should the deal with ABG be finalized, “five locations will close” and “thousands of jobs will be lost. That is the reason why we have continued to entertain discussions” with potential bidders, including Ben-Avraham, a private equity firm, and former Barneys owner David Jackson, who was working on a bid with the backing of a Middle Eastern perfume retailer, Arabian Oud. (Jackson was previously the chief executive of Istithmar World, which purchased Barneys in 2008 and struggled to revive its flagging business, and then sold it to Perry Capital, its current owners until the bankruptcy sale closes, in 2012.) Sussberg mentioned that the parties had been speaking with each other.

In a moment of levity, Sussberg described Ben-Avraham as a backer of Kith, which sells “fancy clothes. I don’t think it’s anything that I would be wearing⁠—my kids say my clothes are awful.”

When asked by the judge, Cecelia Morris, how likely it would be that the deal would come together before the ABG deal closes tomorrow morning, Sussberg said, “We obviously have a lot of hope,” adding that “hope is not a strategy, obviously.”

ABG, which specializes in brand licensing plans to liquidate the store’s holdings and partner with Saks Fifth Avenue, perhaps to open Barneys as a shop-in-shop. (Womp-womp.)

Sussberg told Judge Morris he would like to make a baseball reference: “As the great Yogi Berra once said, it's not over til it's over.”

“And it was over last night,” she replied, referring for the deadline to submit a bid. A few minutes later, she dismissed court to study the proposed terms, making it clear that six conference rooms were available for the potential bidders to attempt to negotiate a deal today. We’ll continue to update this story as it develops.

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