Barneys New York’s bankruptcy filing could come as early as next week, as reports indicate the New York retailer is currently raising financing for said filing. Barneys has been hoping for a path to avoid bankruptcy amid a cash crunch brought on by spiking rents at its Manhattan flagship location.
However, options other than bankruptcy restructuring have become increasingly unlikely after a financing deal fell through earlier this week. Now, it seems, Barneys has begun to raise debtor-in-possession financing to help support its business through bankruptcy. The exact size of the raise remains unknown.
Anonymous sources did tell CNBC that the filing is not yet a foregone conclusion, and the retailer is reportedly looking for other channels to resolve its liquidity issues.
“We continue to work closely with all of our business partners to achieve the goals we’ve set together and maximize value. To that end, our Board and management are actively evaluating opportunities to strengthen our balance sheet and ensure the sustainable, long-term growth and success of our business,” a Barneys spokesperson told CNBC.
Barneys is not alone among department store retailers that have run into a rough patch of late: Nordstrom, Hudson Bay and Macy’s have all logged similar struggles with falling foot traffic and increased digital competition. The amount of real estate costs are an unusual complicating factor for Barneys, however. Rent at its flagship location on Madison Avenue, owned by Ashkenazy Acquisition, jumped from roughly $16 million to approximately $30 million in January, nearly wiping out its earnings before interest, taxes, depreciation and amortization.
Barneys, with roughly $850 million in annual sales, extended the term of its credit line by $50 million in April. That agreement, however, has not been sufficient to stem the losses, and it looks as though the retailer is running out of options.