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Gucci and Prada Take Up Plight of Workers in Barneys Bankruptcy

Barneys' creditors are supporting a bid that would keep more of the bankrupt retailer’s existing stores open.
A shopper outside Barneys New York | Source: Getty
By
  • Bloomberg

NEW YORK, United States — Even some of the world's toniest luxury makers are speaking up on behalf of workers threatened by store closures.

Their concern is highlighted in a court statement from a group of Barneys New York Inc. creditors, which include high-end brands like Gucci and Prada, supporting a bid that would keep more of the bankrupt retailer's existing stores open.

Preserving stores “would inure to the benefit of the thousands of employees — many who live paycheck to paycheck,” not to mention vendors, landlords and customers, according to the document filed Wednesday by the official committee of unsecured creditors.

Concerns about workers displaced by a spate of retail bankruptcies and liquidations have risen in prominence since former employees at Toys “R” Us Inc. began organising to demand promised severance pay in the wake of that retailer’s collapse. The group caught the attention and support of prominent lawmakers including presidential candidates and senators Elizabeth Warren and Cory Booker.

A promise to save jobs at Sears Holdings Corp. helped Edward Lampert secure ownership of the bankrupt retailer after Sears initially rejected his going-concern bid in favour of shuttering the chain.

“Societal needs — such as preservation of employee jobs — are an appropriate consideration in weighing competing offers,” according to the Barneys creditors court filing.

In the 2009 bankruptcy case of Dial-A-Mattress, for example, the fate of workers was identified among key issues to consider in evaluating the highest and best offer, the committee said.

Authentic Brands Group LLC has been designated the so-called stalking-horse, or lead, bidder to buy the assets of Barneys.

The terms of its about $271 million offer include plans to open Barneys shops in 41 Saks Fifth Avenue stores, while closing most of the existing locations. A going-concern bid from a consortium led by entrepreneur Sam Ben-Avraham failed to qualify, leading to the cancellation of a scheduled auction.

Ben-Avraham is planning to make another bid to buy Barneys, WWD reports, citing unidentified people familiar with the matter.

Representatives for Barneys and Ben-Avraham didn’t immediately respond to requests for comment. Authentic declined to comment.

Barneys last week said it would continue to evaluate offers up until its sale hearing on October 31.

The case is Barneys New York Inc., 19-36300-cgm, US Bankruptcy Court for the Southern District of New York (Poughkeepsie).

By Lauren Coleman-Lochner, Eliza Ronalds-Hannon; Editors: Rick Green, Nicole Bullock.

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