The retailer lined up roughly $218 million in debtor-in-possession financing, but much of it may go toward paying off its secured debts.
By Sindhu Sundar on August 13, 2019
Last week in bankruptcy court, Barneys New York’s attorneys heralded a roughly $218 million financing arrangement that they said would better position the luxury retailer for a sale, and which they said showed enduring confidence in the brand.
But vendors shipping to Barneys during the bankruptcy proceedings might be treading with caution, as its new debtor-in-financing agreement envisions paying off all its pre-petition secured debt, with some exceptions, according to court filings on Friday. Given the retailer’s considerable debt — including at least $190 million in secured obligations — as well as its ongoing lease and other expenses during the bankruptcy process, vendors may find themselves in a tenuous position, said bankruptcy attorneys…
“Paying down a substantial portion of the secured debt obligations, with the goal of taking out the secured creditors and replacing them with the new lenders, is pretty standard practice in this kind of environment,” said Brett Amron, a business and bankruptcy litigation partner at Bast Amron LLP, who is not involved in the Barneys proceedings.