A pedestrian walks past a window window in the Barneys New York department store in New York, USA, Thursday, January 22, 2009.
Jin Lee | Bloomberg | Getty Images
Barney's New York provides funding for a filing of bankruptcy that could come as soon as next week, told people who were familiar with the situation of CNBC.
The company has been looking for a way to avoid bankruptcy to help cope with a liquidity rush prompted by a lease on the Manhattan flagship.
However, options other than filing for bankruptcy have become increasingly slimmer, the people said. Conversations with a potential source of finance fell apart on Wednesday, one of the people said.
As a result, Barneys has begun to fund the debtor to help support his business through bankruptcy. The exact size of the DIP funding is still deciding.
The people, who asked for anonymity because the information is confidential, warned that a submission is not secure. Barney's still explores several paths, including those that will help it avoid bankruptcy.
A Barneys spokesperson told CNBC, "We are continuing to work closely with all of our business partners to achieve the goals we have put together and maximize the value. To this end, our governance and management actively evaluate the opportunities to strengthen our balance sheet and Ensure sustainable, long-term growth and business success. "
Barneys is one of many department stores, including Nordstrom, Hudson's Bay Company, JC Penney and Macy's, who are struggling when buyers buy online or online clothing. from brands directly. In luxury retail, while previously unusual for online trends, there is an increased competition from new rivals like Net-a-Porter.
Barneys is facing additional pressure from real estate costs associated with its more than 1
Renting at Barneys' flagship on Madison Avenue, owned by Ashkenazy Acquisition jumped from about $ 16 million to about $ 30 million in January, almost wiping out revenues before interest, taxes, depreciation, and amortization.
Barneys, who has about $ 850 million in revenue, extended the credit line term to $ 50 million in April, hoping for a lifeline. Credit agreements with existing lender Wells Fargo and the new lender, TPG Sixth Street Partners, have still not been enough to delay the losses.