Barneys Chooses Authentic Brands As Initial Bidder

Barneys Chooses Authentic Brands As Bidder

Barneys New York has chosen Authentic Brands Group, which owns and licenses fashion, celebrity and media brands, as its initial bidder.

Barneys filed for bankruptcy in August and has already closed 15 of its 22 stores. The department store had filed for bankruptcy protection in the 1990s and survived.

Sources told Bloomberg that Authentic Brands has offered the retailer around $270 million as a “stalking-horse” bidder. Stalking-horse bidders are chosen to make an introductory offer for a company’s assets and will receive a break-up fee if a deal is not completed. In turn, retailers have the opportunity to receive both liquidation bids and offers to keep its business operating.

With the Authentic Brands offer, Barneys shops will open in Saks Fifth Avenue stores, while some freestanding Barneys locations will remain open. The flagship Madison Avenue store is still under discussion, with Barneys reportedly wanting to keep its main store in Manhattan as well as four other locations. The sky-high rent of the Madison Avenue store, which went from $16 million to about $30 million, was one reason for the company’s problems. In fact, it wiped out the company’s earnings prior to tax, interest, amortization and depreciation.

An investor group headed by Sam Ben-Avraham, who launched New York retail store Atrium and streetwear brand Kith, is also expected to make an offer before the deadline. The group was not able to get a deal together to receive stalking-horse status.

“Authentic Brands has a business model in which they acquire intellectual property from companies and they have a system for monetizing it,” Ben-Avraham said. “I’m coming from a different world, and our approach is developing brands to maximize the potential but still maintain the integrity of the brand.”

He added that his group’s offer will “maintain the integrity of the brand and its relationship with the customers, suppliers and workers.”

The bankruptcy auction is set to happen no later than Oct. 29.


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