Luxury department store Barneys New York Inc has filed for bankruptcy after getting squeezed by soaring rents and falling revenue.
The American high-end retailer filed for Chapter 11 bankruptcy protection early Tuesday morning and announced it will close 15 locations, leaving it with seven stores and two Barneys Warehouse locations, according to a CBS report.
Barneys’ flagship store on Madison Avenue, New York, and another store located in downtown Manhattan, will remain open. Stores in Beverly Hills, California, San Francisco and Copley Place in Boston are also among those that have been granted a reprieve.
The luxury chain was said to have reached a deal giving it until late October to find a buyer or start liquidation process that will result in its stores stores closing for good.
According to Reuters, Joshua Sussberg, a Kirkland & Elllis LLP restructuring lawyer who represents Barneys, said the company doesn’t have a “white knight as we stand here right now” during the emergency bankruptcy-court hearing in New York.
“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,” Barneys CEO Daniella Vitale said in a statement.
According to a CNN report, Vitale said the bankruptcy filing will allow the company “to conduct a sale process, review our current leases and optimize our operations.”
Yesterday, Sussberg said Barneys had reached a deal for about $218 million in fresh financing from Brigade Capital Management LP and B. Riley Financial Inc. that would repay existing lenders and help the retailer to continue its operations while pursuing a sale.
US Bankruptcy Court judge Cecilia Morris has allowed Barneys to tap $75 million of that loan.
The iconic luxury chain, which was founded by Barney Pressman in 1923 in New York as a discount clothing store, employs about 2,300 people.