A pedestrian walks past a window display at Barneys New York department store in New York, U.S., on Thursday, Jan. 22, 2009.
Jin Lee | Bloomberg | Getty Images
Barneys New York is preparing to file for bankruptcy as soon as Monday evening, according to people familiar with the matter.
The embattled luxury department store chain is nearing an agreement with lenders that would secure it enough financing to give it time to find a buyer, the people said, asking to remain anonymous because the discussions are private.
Barneys is close to a deal with Gordon Brothers and Hilco Global, firms that specialize in selling assets for distressed companies, they said.
Barneys is also reportedly looking to immediately close most of its locations but is seeking to find buyers for seven core locations across the country, The Wall Street Journal reported on Monday. The retailer has 13 department stores and nine warehouse stores.
If the deal goes through, the Journal reported, Barneys would have a loan to fund it for 60 days while it tries to find a buyer in bankruptcy court, it said. If Barneys can’t reach a deal, it will have to liquidate, the report said.
“The Barneys New York Board and management continue to work constructively and collaboratively with a number of parties and are committed to reaching a mutually agreeable resolution to strengthen our business,” a Barneys spokesperson said in an emailed statement.
CNBC had reported at the end of July that Barneys was starting to raise financing for a bankruptcy filing, which continues to be delayed. It’s been looking for a path to avoid bankruptcy, to help cope with a liquidity crunch spurred by a rent hike at its Manhattan flagship.
Barneys is one of many department stores — including Nordstrom, Hudson’s Bay Company, J.C. Penney and Macy’s — that are struggling as shoppers buy apparel online or directly from brands. Luxury retail, meantime, while previously immune to online shopping trends, is seeing increased competition from new rivals like Net-a-Porter.
Barneys is facing extra pressure from the real estate costs associated with its more than 10 namesake stores in New York, California, Chicago, Massachusetts, Las Vegas, Seattle and Pennsylvania.
Rent at Barneys’ flagship 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.
A bankruptcy filing from Barneys this week would mark its second. It filed for the first time, to protect the company from creditors, back in 1996.