After a few last-minute rescue bids failed to gain traction, Authentic Brands Group officially won court approval to become the new owner of bankrupt Barneys New York. With the winning $271.4 million bid, Authentic Brands and partner investment bank B. Riley Financial are expected to close the majority of Barneys New York stores, liquidate the company’s remaining assets and license the Barneys New York name and intellectual property to Saks Fifth Avenue, which plans to open approximately 40 Barneys shops within its stores. Authentic Brands has agreed to keep the Madison Avenue flagship open for 12 more months under a deal with the store’s landlord Ashkenazy Acquisition Corp.
The ruling came after lawyers for Barneys told federal bankruptcy court Judge Cecelia Morris that Authentic Brands was the only qualified bid the company had received by the time of the Oct. 31 sale hearing in Poughkeepsie, N.Y.
Barneys, an iconic luxury brand that was a staple in high end American fashion for nearly 100 years, filed for Chapter 11 bankruptcy in August and secured financing of $218 million from B. Riley and Brigade Capital Management to pay its vendors and employees. In bankruptcy, the retailer has scaled down from more than 10 of its namesake stores to five.
The Authentic Brands offer met resistance from Barneys’ unsecured creditors, who called it a liquidation bid that would hurt workers, vendors and customers. The group, which included labels like Gucci and Prada, had urged the court to work with a buyer that would keep Barneys stores open, such as fashion entrepreneur Sam Ben-Avraham.
Ben-Avraham, Founder of New York-based brands Kith and Atrium, had led a group that entered a $220 million bid for Barneys and was continuing to work on a potential deal prior to the deadline. However, his consortium never ended up submitting a newer deal, as Barneys’ lenders refused to give them one extra day to put together financing.The group led by Ben-Avraham had gone so far as to start an Instagram campaign to #SaveBarneys with an online petition.
After failing to win the bid, Ben-Avraham’s @TheSpiritOfBarney Instagram account posted a note about pulling out of the race:
“Unfortunately, we failed to convince enough people in the business community that it made economic sense to keep Barneys alive. Some unexpected roadblocks were put in our way. We understood from the beginning that looking at spreadsheets and numbers, it did not make sense, but we saw a future beyond that. We knew that once we overcame that hurdle there would be light at the end of the tunnel.”
With the sale, Barneys New York CEO Daniella Vitale is stepping down from the role, according to The New York Post. Vitale sent a memo to Barneys employees after Judge Morris signed the purchase order.
“We have all worked very hard to avoid this outcome,” Vitale wrote in the memo. “I understand this has been a long and uncertain process, and I want to thank you all for your focus and dedication to keeping Barneys moving forward.”
Although Morris officially made the ruling on Oct. 31, potential bidders did have a deadline of 10 a.m. on Nov. 1 to put a last-minute bid through. David Jackson, former CEO of the Dubai-based fund Istithmar, which previously owned Barneys until 2012, teamed with a group of investors to propose scooping up the chain for more than $280 million in partnership with Arabian Oud, the largest fragrance retailer in the Middle East. Like Ben-Avraham’s consortium, however, Jackson’s group couldn’t assemble the bid before the 10 a.m. court deadline.