What to Watch: Barneys in Bankruptcy: What’s Ahead

For bankrupt Barneys New York, the wish list is big. Barneys needs a buyer that will cough up money, creates a new Barneys free of debt and understands the limits of the narrow luxury niche Barneys targets. Barneys also needs vendors to show support by shipping to the store despite its precarious state, and landlords willing to reset lease terms. Owner Richard Perry has tried to sell the business before and had no takers, but there could be some interest in buying Barneys in a bankruptcy fire sale. And through the court-approved debtor-in-possession financing, vendors are guaranteed payment on orders delivered post-filing. Yet there are still risks of getting stuck with merchandise or caught in a swirl of markdowns in the event of a liquidation. Barneys could be forced into liquidation if the bankruptcy court sees bills aren’t being paid. That’s of particular concern to small and midsized manufacturers who don’t have their own stores or outlets to absorb merchandise Barneys can’t take. Orders were taken in June for pre-spring, production is in motion, and vendors likely will get paid on those deliveries generally arriving in November. The next round of order taking seems riskier. It occurs in September and October for spring

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