Photo: ShutterstockBarneys Taps Kirkland, Katten for Chapter 11 as Retailers' Woes Continue
For Big Law bankruptcy practices, every brick-and-mortar retail failure has a silver lining.
August 06, 2019 at 11:58 AM
3 minute read
From high-end clothing to home goods to cheap toys, Big Law restructuring departments continue to find a front-row seat—and a key revenue source—amid the decay of America’s brick-and-mortar retail economy.
Barneys New York, the luxury retailer that in recent years has fallen into financial peril, is among the latest retailers to turn to Kirkland & Ellis, tapping the firm as debtor’s counsel in a Chapter 11 filing Tuesday morning in the Southern District of New York.
In a press release, the company said it had secured $75 million from Hilco Global and the Gordon Brothers Group to continue operations as it reorganizes under Chapter 11. Joshua Sussberg, a New York-based partner in Kirkland’s restructuring group, will lead the company’s restructuring efforts, according to court documents. Katten Muchin Rosenman was named conflicts counsel.
Barneys’ CEO and president, Daniella Vitale, cited increasing rent prices and a changing retail economy as reasons for the company’s financial woes. She said in a statement that pursuing a sale under court supervision was the most efficient way for Barneys to move forward and remain operational.
As part of its restructuring plans, the company said it was closing three of its stores in Chicago, Las Vegas and Seattle, five small concept stores and seven Barneys Warehouse locations. Five locations will remain open, including Barneys’ flagship in New York.
The Wall Street Journal first reported of Barneys’s intentions to file for Chapter 11 Monday and continued its coverage after Tuesday’s filings.
Barneys is only the most recent large retailer to turn to Kirkland, which in recent years has counseled numerous retailers in high-profile bankruptcy proceedings as the country’s once-mighty brick-and-mortar retail economy has faltered.
Earlier this year, the Chicago firm netted more than $56 million in fees for handling Toys “R” Us’ bankruptcy proceedings. Kirkland is also advising struggling department store J.C. Penny as it tries to manage nearly $4 billion in debt, according to Reuters.
The firm missed out on the recent Sears Chapter 11, however, with the former retail juggernaut turning instead last year to a Weil, Gotshal & Manges team led by former Kirkland partner Ray Schrock.
Representatives at Kirkland did not immediately respond to requests for comment.
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