In a first step toward determining its fate, Barneys New York Inc. has selected a consortium led by Authentic Brands Group LLC as its initial bidder, setting a floor for offers due next week for the bankrupt luxury retailer.

The US$271 million offer from the Authentic Brands group includes a plan to open Barneys shops in Saks Fifth Avenue stores, according to people with knowledge of the matter. The so-called stalking-horse bid calls for closing seven Barneys stores, including its two Manhattan locations and its Beverly Hills store, according to a court filing late Wednesday.

The fate of some stores, including its flagship Madison Avenue location, however, is still under discussion, according to one of the people with knowledge of the plans, who asked not to be identified discussing private negotiations.

Authentic owns and licenses fashion, celebrity and media brands including Nine West and Sports Illustrated.

The stalking horse group includes B. Riley Financial Inc., according to the bankruptcy court filing in Poughkeepsie, New York. Authentic didn’t provide an immediate comment, while Saks’ parent Hudson’s Bay Co. declined to comment.

A Barneys representative said in an emailed statement that the offer was “a strong recognition of the value of Barneys’ assets and brand name.”

Barneys filed for bankruptcy protection in August and said it would close 15 of its 22 stores, exempting its Beverly Hills location and the Madison Avenue store, among others.

Stalking Horse

Bankrupt companies designate stalking-horse bidders, sometimes before filing, to establish an introductory offer for their assets. Such bidders receive a break-up fee if a deal isn’t consummated. For the Authentic Brands bid, that would be about $8.1 million, or 3% of the purchase price, according to the court filing. Retailers may receive both liquidation bids and offers to keep the chain operating.

Barneys outlined a swift sale process that could be substantially completed by the end of this month. Any new bids are due by 5 p.m. on Oct. 22, with an auction two days later if any of those new bids are qualified, and a hearing to approve the sale on Oct. 31.

Rival bids in the Barneys bankruptcy case may still emerge before the Oct. 22 deadline. That includes a consortium led by Sam Ben-Avraham, known for his roles in starting New York retail store Atrium and streetwear brand Kith.

Ben-Avraham’s group is planning to bid on or before that deadline, he said in an interview, and their offer will look to “maintain the integrity of the brand and its relationship with the customers, suppliers, and workers,” he said.

“Authentic Brands has a business model in which they acquire intellectual property from companies and they have a system for monetizing it,” Ben-Avraham said. “I’m coming from a different world, and our approach is developing brands to maximize the potential but still maintain the integrity of the brand.”

Ben-Avraham had been pursuing an offer to buy Barneys for about $220 million, but wasn’t able to line up financing by the deadline for the stalking horse role, the Wall Street Journal reported.

The case is Barneys New York Inc., 19-36300-cgm, U.S. Bankruptcy Court for the Southern District of New York (Poughkeepsie)