Bad news for Barney's fans: the troubled company will be even shorter of cash now that some of its factors have backed out. Factors are companies that buy accounts receivable at a discount: the process is commonly used by retailers to help with the large cash outlays needed to purchase inventory.
If Barney's factors don't approve its proposed purchases, it can't stock its stores with the Spring 2009 collections. To make matters worse, the company still doesn't have a CEO, but is being run by a committee.
The financial vise is tightening on Barneys New York, with some factors no longer approving spring orders as a result of uncertainties over the luxury chain's future.
Barneys' costly expansion of the past three years has failed to gain traction; the retailer has been without a chief executive officer since last July, and the severe downturn in retailing, particularly the luxury sector, has hit the retailer and its cash flow hard. Its owner, Dubai-based Istithmar, has been quietly trying to sell the chain at a price no one wants to pay as the Middle Eastern emirate faces its own economic meltdown.
All those factors are making certain vendors and suppliers skittish over Barneys and less inclined to take risk, though the luxury chain appears current on its bills.
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Meanwhile, executives at major fashion houses said they are continuing to ship to the store. "Barneys is current [on its payments] and shipable," said Patrick Guadagno, president of Versace in the U.S. "It's business as usual."
One sportswear designer who requested anonymity said the store paid this season. Major stores have been good on their payments, but some smaller independent retailers are facing challenges in paying, the designer said.
Executives at many smaller fashion firms said they, too, were getting paid, although at least one said payment was slower than usual.
One factor said a temporary halt on approving spring orders has more to do with wanting to know what Barneys' owner has in mind for the future of the chain. He explained that, essentially, factors just want to know "how much ongoing support Barneys will get from Istithmar going forward."
If the information is satisfactory, orders will start being approved in March, factors said.
Barney's is still current on all its bill and its parent company has the funds to support it while it is searching for a buyer. But so far, no one wants to buy the company.
Bad news for Barney's fans: the troubled company will be even 
