Barneys begins to raise financing for potential bankruptcy

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A pedestrian walks past a window display at Barneys New York department store in New York, U.S., on Thursday, Jan. 22, 2009.

Jin Lee | Bloomberg | Getty Images

Barneys New York is raising financing for a bankruptcy filing that could come as soon as next week, people familiar with the situation told CNBC.

The company has been looking for a path to avoid bankruptcy to help cope with a liquidity crunch spurred by a rent hike at its Manhattan flagship, CNBC previously reported.

Options beyond filing for bankruptcy, though, have grown increasingly slim, the people said. Talks with one potential financing source fell apart Wednesday, one of the people said.

As a result, it has begun to raise debtor-in-possession financing to help support its business through bankruptcy. The exact size of the DIP financing is still yet to be determined.

The people, who requested anonymity because the information is confidential, cautioned that nothing is yet certain. Barneys is still exploring multiple paths, including those that would help it avoid bankruptcy.

A spokesperson for Barneys told CNBC, “We continue to work closely with all of our business partners to achieve the goals we’ve set together and maximize value. To that end, our Board and management are actively evaluating opportunities to strengthen our balance sheet and ensure the sustainable, long-term growth and success of our business.”

This is a breaking story please check back for updates.



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