This is not the first bankruptcy threat for Barneys, which began life in 1923 as a small men’s wear store founded by Barney Pressman and was built by his family into a symbol of international chic and Manhattan aspiration.
In 1996, after a dispute with the Japanese department store company Isetan, its partner at the time, the company filed for Chapter 11.
Isetan had entered into a joint venture agreement with Barneys in 1989 to finance the company’s expansion; in the next five years, the deal made it possible to open 17 stores, including the Madison Avenue location, at a cost of about $600 million. However, Barneys, which was having cash-flow issues, began to balk at what it saw as onerous rent payments on its most glamorous stores. Isetan claimed mismanagement, Barneys filed and the two partners sued each other.
Isetan eventually emerged with the title to the Barneys stores in New York, Chicago and Beverly Hills, Calif., as well as a small equity stake in the company. The Pressmans were largely out, and two majority investors, Whippoorwill Associates and Bay Harbour Management, were in charge. The company has since changed hands three times. The private equity group Perry Capital is now the majority stake holder.
In 2001, Isetan cuts its ties with Barneys by selling the buildings in Beverly Hills, Chicago and New York to Ashkenazy Acquisition Corporation for $180 million. At that time, a 20-year lease was negotiated for the Madison Avenue building that set the annual rent at $16 million, with a clause stating that when it came up for renewal, it could be raised to a fair market value. Ashkenazy had asked for $60 million.
It is not clear what the landlord, which also leases space at Union Station in Washington and Faneuil Hall Marketplace in Boston, plans to do with the space if Barneys vacates. Ben Ashkenazy, the firm’s chief executive, did not return requests for comment; Michael Alpert, its vice chairman, declined to comment.
“It’s crazy to double the rent; half of Madison Avenue is empty,” said Peter Marino, the architect who designed the Madison Avenue store, suggesting that if Barneys left, it was unlikely to be replaced as a tenant by another store.