Please try another search
© Reuters. Shoppers enter and exit the Neiman Marcus at the King of Prussia Mall, United States' largest retail shopping space, in King of Prussia
By Jessica DiNapoli and Mike Spector
NEW YORK (Reuters) - Neiman Marcus Group is stepping up preparations to seek bankruptcy protection, after the coronavirus pandemic forced the debt-laden U.S. luxury department store chain to close its stores, people familiar with the matter said on Thursday.
Neiman began holding confidential discussions this week with bondholders about possible financing that would help the company continue operating while under bankruptcy protection, the sources said. The company has also started similar discussions in recent days with its lenders, one of the sources said.
Up until this week, Neiman had received inquiries from creditors about its next moves but had not commenced discussions about a possible bankruptcy, some of the sources said.
Even though these talks are advancing, the Dallas-based retailer is several weeks away from a potential bankruptcy, and it is still possible that it manages to escape it, the sources said.
Creditors could give Neiman additional time to make upcoming debt payments due this month while restructuring discussions continue, which could result in a transaction that reworks financial obligations outside of bankruptcy proceedings, the sources added.
The sources asked not to be identified because the matter is confidential. Neiman declined to comment. Last month, the company said it was "evaluating all courses of action to preserve our financial strength" because of the coronavirus pandemic.
Neiman reached a deal last year with creditors to rework debt and avoid a bankruptcy filing, gaining more financial breathing room. But the coronavirus outbreak forced the company to close all Neiman, Bergdorf Goodman and Last Call stores it operates through the end of April, and furlough most of its 14,000 employees.
The closures have resulted in a cash crunch just before significant interest payments on portions of its more than $4 billion of debt are due starting April 15.
Portions of Neiman Marcus's term loan were trading at roughly 40 cents on the dollar this week, well below face value, indicating significant investor concerns about repayment, according to Refinitiv Eikon data. The price for a set of Neiman bonds has also fallen.
Neiman has struggled following a $6 billion leveraged buyout by private equity firm Ares Management Corp (N:ARES) and Canada Pension Plan Investment Board in 2013. Like many traditional brick-and-mortar retailers, it has faced relentless competition from e-commerce giant Amazon.com Inc. (O:AMZN). Ares had no immediate comment, while the CPPIB did not immediately respond to a request for comment.
Neiman was able to persuade creditors to restructure debt last year without resorting to bankruptcy proceedings, pushing out due dates on its financial obligations. But the deal added to the company's interest expenses on debt, and did not address its struggling business, which has worsened.
A Neiman bankruptcy filing would likely be contentious. A trustee for some of the company's bondholders sued Neiman last year, claiming the company and its owners robbed investors of the value of luxury e-commerce site MyTheresa in the earlier debt restructuring.
"If this storied brand files for bankruptcy ... MyTheresa will take center stage," said Dan Kamensky, managing partner at Marble Ridge Capital LP, one of the bondholders. “The private equity owners stripped the … MyTheresa asset from the company without paying a dime and leaving a carcass of a company for its creditors."
Neiman has said the allegations are meritless and that its handling of MyTheresa was proper.
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.