Barneys Files for Bankruptcy, Plans to Close 15 Stores

New York—Luxury department store chain Barneys New York Inc. filed for Chapter 11 bankruptcy protection Tuesday morning in New York, confirming previous reports that the company was exploring its options amid soaring costs and declining sales.

According to a company statement or the bankruptcy filing, the iconic retailer plans to close 15 of its 22 stores, including locations in Chicago, Las Vegas, and Seattle, as well as five of its smaller concept stores and seven Barneys Warehouse stores.

It will continue operating five flagship locations—on New York’s Madison Avenue and downtown Manhattan as well as its stores in Beverly Hills, San Francisco and Copley Place in Boston.

The Barneys Warehouse stores in outlet centers Woodbury Common in upstate New York and Livermore in California will also remain open, and Barneys’ websites will continue to fulfill orders.

The company is looking for a buyer and initially received an offer of $75 million in debtor-in-possession financing—a type of financing extended to companies in distress that is overseen by the lender and subject to court approval— from financial services companies Hilco Global and the Gordon Brothers Group to support its sale process.

But another last-minute offer materialized the day of its Chapter 11 bankruptcy filing. Brigade Capital Management and B. Riley Financial came in with an offer of $218 million in DIP financing.

“Like many in our industry, Barneys New York’s financial position has been dramatically impacted by the challenging retail environment and rent structures that are excessively high relative to market demand,” CEO Daniella Vitale said in a statement.

A recent rent hike weighed heavily on the retailer’s balance sheet.

The rent on Barneys’ Madison Avenue flagship jumped from $16 million to $30 million a year after a city arbitrator approved a rent hike by landlord Ashkenazy Acquisition upon the expiration of its lease in January.

Ashkenazy Acquisition bought the building after Barneys first Chapter 11 filing in 1996, following a dispute with its partner Isetan, a Japanese department store chain.

At the end of the legal proceedings, Isetan held the titles to the Barneys stores in New York as well as in Chicago and Beverly Hills and it sold them to Ashkenazy Acquisition for $180 million in 2001.

In its statement on Tuesday’s Chapter 11 filing, the retailer said it has filed motions related to supporting its operations, including continuing to pay employee wages and benefits as well as honoring customer payments and orders, which it expects