Barneys, the iconic New York luxury department store, filed a petition for Chapter 11 bankruptcy and plans to close 15 of its stores. According to the New York Post, the rent on its flagship location doubled, which pushed the company to file for bankruptcy protection. At Corash & Hollender, P.C., we understand how an overwhelming increase in rent, taxes and operating expenses sometimes causes a business owner to look for a way to restructure a balance sheet.

When the rent on its Madison Avenue store doubled and cut into its profit margin, the retailer needed a new plan to continue keeping its doors open. By filing its bankruptcy petition, the company was able to secure a $75 million loan, which provides resources to reorganize its operations and cut costs in its lagging sectors. With its plans to close several retail stores, warehouses and smaller specialty shops, the company may realize a significant reduction in its monthly overhead.

The company’s management also intends to find a buyer or new investors for the struggling retailer. A Chapter 11 bankruptcy may help in restructuring its debt so that the business appears more attractive to a potential new owner who could make it profitable again.

Not every business in New York requires shuttering locations and finding new owners in order to get through a sales slump. Entering into bankruptcy protection, however, may help during a period of extreme distress. A petition may assist an enterprise in getting a handle on its overpowering debt, regardless of the company’s size.

Partnerships, small corporations and entrepreneurial enterprises may have other options in the type of bankruptcy protection they might require. Our page on bankruptcy options provides more information on which of the filing procedures may be best for a distressed or restructuring business.