This issue of the Bankruptcy Update focuses on recent restructurings in the retail sector, including iconic luxury department store Barneys New York, fast-fashion juggernaut Forever 21 and specialty retailer Destination Maternity.

Barneys New York

On Aug. 6, 2019, luxury retailer Barneys New York and affiliated debtors filed petitions for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York, in Barneys New York (Bankr. S.D.N.Y. Case No. 19-36300).

Following a common theme in the retail industry, Barneys attributed its filing to online competition and drastic rent increases that resulted in a liquidity crisis. Initially founded as a men's retailer in 1923, the company grew to sell men's and women's clothing, shoes, accessories, cosmetics, fragrances and home décor at locations in New York, Los Angeles, San Francisco, Boston, Chicago, Las Vegas and Seattle, as well as various discount warehouse locations and concept stores.

The debtors commenced their search for new financing or a buyer in June 2019 but were ultimately forced to file their Chapter 11 cases without a stalking horse commitment in place. To fund operations under Chapter 11, the company sought approval of a $217 million financing package to be funded by Brigade Capital Management and an affiliate of B. Riley Financial, with a substantial portion of the financing slated to roll-up prepetition secured debt held by the debtor-in-possession lenders. The financing arrangement drew the ire of the official committee of unsecured creditors for its limited new money component and onerous lending terms but was nevertheless approved by the bankruptcy court on a final basis Sept. 4, 2019.