Lowenstein Sandler is representing investment bank B. Riley Financial and its affiliate, Great American Group, which specializes in retail asset disposition, in the Chapter 11 bankruptcy of Barneys, the upscale luxury department store chain. At the outset of the case, B. Riley affiliates provided a $40 million inventory consignment facility and part of a $217 million loan that enabled Barneys to continue its operations in Chapter 11.
On October 16, 2019, Barneys selected a $271.4 million bid for all of the retailer’s assets by a joint venture between B. Riley and Authentic Brands Group as the stalking-horse bid in a sale process that some are calling a battle for the future of retail. Pursuant to the bid, Authentic will acquire the Barneys brand and related intellectual property, while B. Riley affiliates will sell the retailer’s other assets. Chief Judge Cecelia G. Morris of the U.S. Bankruptcy Court for the Southern District of New York is expected to issue a ruling in the sale process, which will include an auction if Barneys receives competing bids, on October 24, 2019.
Kenneth A. Rosen, partner and Chair of the firm’s Bankruptcy & Restructuring Department, stated that, initially, the industry did not know what to expect with Barneys' second bankruptcy: “No one knew if there would be a market for this upper echelon of luxury fashion.” He predicted that the eventual outcome of the bidding war may indicate whether luxury brands can survive and thrive without a flagship store. “The strength of a brand like Barneys may prove to be durable without its own traditional brick-and-mortar establishments, bringing additional value to other luxury retailers without the big overhead.”