It’s official: Barneys will be sold to Authentic Brands Group and B. Riley for about $270 million.
The deal, approved by Judge Cecilia Morris in bankruptcy court Thursday morning, means that ABG, a brand merchandiser, will own the luxury department store’s intellectual property. It also will allow the new owner to partner with rival department store Saks Fifth Avenue to use Barneys’ name in its stores.
It also means that, most likely, the new owners will shutter Barneys’ locations — including its 275,000-square-foot flagship property at Ashkenazy Acquisition’s 660 Madison Avenue. A property in Boston may stay open, Barneys’ attorney said.
“It’s a sad day,” Morris said after she made her decision.
A representative for Barneys would not immediately provide a comment after the hearing.
Rick Chesley, ABG’s attorney, said after the hearing that closing the stores was just one option on the table the new owners would evaluate.
Still, the move marks yet another blow to the retail industry, which has suffered from a string of retailer bankruptcies, store closures and liquidations.
The challenges have rattled both discount and high-end retailers, and the U.S. is on pace to close a record 12,000 stores this year, according to research from Coresight. Barneys had already said it would close 15 of its 22 locations, but the shuttering of more large department stores leaves additional vacancies landlords must work to fill.
Barneys, which filed for Chapter 11 bankruptcy in August after a huge rent increase at its flagship, already signaled that ABG was its stalking bid offer earlier in the month. But news reports swirled over the past couple of weeks that at least two other offers may be on the table. And yesterday, Barneys’ unsecured creditors, a group that includes some of its landlords, signaled that they have the right to review any other offer that comes in, especially if it preserves stores and jobs.
But in a Poughkeepsie courtroom, where the hearing was held, those offers never surfaced, said Joshua Sussberg, Barneys’ attorney.
Sussberg said the company had wanted to work out deals with at least three other groups who would work the keeps Barneys’ doors open and employees working.
“Everybody at this company… has been working 24 hours a day … to try to achieve this goal,” he said.
One revised offer was to come from a group of investors led by Kith investor Sam Ben-Avraham, who started an online campaign to try to save Barneys. Those investors had submitted a lower bid earlier in the process that had been rejected.
David Jackson, former head of Istithmar World, once an owner of Barneys, and a third group, a private equity firm, also were working to craft deals. Those also never pulled through, Sussberg said.
The transaction is set to close Nov. 1 at 10 a.m. but Sussberg said the purchase agreement has a provision that should circumstances change — say, another offer pops up — before the closing time, the debtors have the right to review it.
“If something changes,” he said, “we will be in touch.”