APPEL ASSOCIATES, LLC  •  914.806.3632 Mobile  •

As Barneys was preparing to exit from Chapter 11, Whippoorwill Associates and Bay Harbour Management (the “Stakeholders”) contemplated converting debt to equity and investing additional capital in the company. In connection with that event, Barneys management prepared a revised business plan. At the same time, the Stakeholders wanted an objective review of the plan to test and validate management’s revised assumptions. To do so, they retained Michael Appel, who had the requisite retail operating and turnaround expertise.


Appel conducted a comprehensive study of all aspects of Barneys revised plan, from merchandising, operations and financial standpoints. In addition, Appel conducted an evaluation of the current management team, including an assessment of their ability to execute this new business plan.


Appel interviewed 20 members of senior management (including extensive follow-up with the CEO and CFO), a cross-section of Barneys vendors, as well as third-party industry observers. The Five Year Plan was reviewed in detail, along with supporting data, and assumptions were tested in a variety of speculative scenarios. Appel also reviewed analyst research on benchmark competitors and other available industry data.


Appel concluded that the Fall 1998 and Fiscal 1999 plans were reasonable and achievable. While the sales plan was conservative, the EBITDA projections were considerably below conservative benchmarks. Appel also concluded that the organization was effective and could execute the plan. However, significant changes were required—and subsequently effected in senior management.


Following the delivery of the completed study, the Stakeholders proceeded to consummate the plan and the aforementioned investment. Barneys then emerged from Chapter 11 and has since performed substantially in accordance with the plan.