Barneys New York is preparing to file for bankruptcy as soon as Monday evening, according to people familiar with the matter.
The embattled luxury department store chain is nearing an agreement with lenders that would secure it enough financing to give it time to find a buyer, the people said, asking to remain anonymous because the discussions are private.
Barneys is close to a deal with Gordon Brothers and Hilco Global, firms that specialize in selling assets for distressed companies, they said. A deal would give Barneys 60 days to try to find a buyer in bankruptcy court, one of the people said. If Barneys can't reach a deal, it will likely have to liquidate.
Barneys is also looking to immediately close most of its locations. It is seeking to find buyers for seven, if not fewer, core locations across the country, one of the people said. Its main focus is keeping its Madison Avenue in New York and Beverly Hills, California, stores opened and stocked.
The retailer has 13 department stores and nine warehouse stores.
"The Barneys New York Board and management continue to work constructively and collaboratively with a number of parties and are committed to reaching a mutually agreeable resolution to strengthen our business," a Barneys spokesperson said in an emailed statement.
CNBC had reported at the end of July that Barneys was starting to raise financing for a bankruptcy filing, which continues to be delayed. It's been looking for a path to avoid bankruptcy, to help cope with a liquidity crunch spurred by a rent hike at its Manhattan flagship.
Barneys is one of many department stores — including Nordstrom, Hudson's Bay, J.C. Penney and Macy's — that are struggling as shoppers buy apparel online or directly from brands. Luxury retail, meantime, while previously immune to online shopping trends, is seeing increased competition from new rivals like Net-a-Porter.
Barneys is facing extra pressure from the real estate costs associated with its more than 10 namesake stores in New York, California, Illinois, Massachusetts, Nevada, Washington and Pennsylvania.
Rent at Barneys' flagship on Madison Avenue, owned by Ashkenazy Acquisition, jumped from roughly $16 million to approximately $30 million in January, nearly wiping out its earnings before interest, taxes, depreciation and amortization.
A bankruptcy filing from Barneys this week would mark its second. It filed for the first time, to protect the company from creditors, back in 1996.
The Wall Street Journal first reported Barneys' plans for a Monday filing.