In this article, Adam Stein-Sapir of Pioneer Funding, LLC, provides insights into the financial troubles of Barneys New York during its bankruptcy proceedings.
Article Link: https://thesungazette.com/article/business/2020/01/01/svenhards-files-for-chapter-11-bankruptcy/
Summary
Barneys New York, despite being sold to Authentic Brands Group for $271 million, is facing severe insolvency issues, leaving many luxury vendors with unpaid debts. The upscale retailer’s bankruptcy has resulted in vendors like Yves Saint Laurent, Gucci, Prada, and Balenciaga potentially receiving nothing for goods delivered before the bankruptcy filing. Those who supplied goods post-bankruptcy might only recover 40 cents on the dollar. Vendors are challenging Barneys’ liquidation plan, as the available funds are insufficient to cover the owed amounts. Adam Stein-Sapir, a distressed debt expert, explains that the vendors are unlikely to be compensated for merchandise present in stores at the time of filing. The situation is exacerbated by Barneys’ administrative insolvency and the high costs of professional services during the bankruptcy process.
- Barneys New York is “massively” insolvent, with vendors likely to receive little to no payment for goods supplied.
- Luxury vendors such as Yves Saint Laurent and Balenciaga could lose around $2.2 million each, with others facing similar losses.
- Adam Stein-Sapir comments on the lack of vendor compensation and the impact of shoppers’ purchases during the liquidation phase.
Q&A
What happens to vendors when a retailer like Barneys files for bankruptcy?
Vendors often face significant losses when a retailer files for bankruptcy, as they are typically among the last to be paid in the liquidation process. In the case of Barneys, many vendors are expected to receive little to no compensation for their goods, especially for items delivered before the bankruptcy filing. For more information on how to handle such situations, vendors can visit Pioneer Funding LLC’s guide for customers filing bankruptcy.
How does administrative insolvency affect the bankruptcy process?
Administrative insolvency occurs when a bankrupt company does not have enough funds to pay the administrative expenses of the bankruptcy process, including professional fees for legal services. This situation can lead to even less money being available to pay creditors and vendors, as seen in Barneys’ case.
What are the implications for shoppers during a bankruptcy liquidation sale?
Shoppers participating in a bankruptcy liquidation sale are essentially supporting the liquidators rather than the vendors who supplied the merchandise. According to Adam Stein-Sapir, the money spent by consumers during these sales does not go towards paying off the debts owed to the vendors, many of whom will suffer significant financial losses as a result of the bankruptcy.
