Another Bankruptcy? Barneys Seen In Financial Trouble

Barneys New York, whose financial performance and track record paying vendors has long been questionable,  is now “actively evaluating opportunities to strengthen its balance sheet,” the company said Sunday. Possibilities range from finding an investor, incurring debt, or declaring bankruptcy. Efforts within the last couple of years by owner Richard Perry to sell the business were unsuccessful. Many retail bankruptcies stem from huge debt burdens on businesses that can’t generate enough cash to service their debt. Rent can also be a big factor in bringing down a retailer. While Barneys does not have significant debt, it did get a whopping increase in rent on its Madison Avenue flagship. The rent went from $16 million to over $30 million a year. There was also a rent increase for the Beverly Hills store. Both properties are owned by the Askenazy family. Also, Barneys Madison Avenue flagship is seen as being over-spaced and lacking in robust shopper traffic, although the Freds restaurant inside the store is consistently busy and filled with VIP-type patrons. In addition, for many seasons there have been on-and-off again expressions of concern from factors and vendors regarding overdue payments from Barneys, suggesting issues with liquidity. However, when asked about that, Barneys executives have

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