Bankruptcy reportedly close for Neiman Marcus as it skips loan payment
The clock is ticking for Neiman Marcus Group.
The luxury retailer, which was already struggling under the burden of a heavy debt load before it closed its stores amid the COVID-19 pandemic, has defaulted on large interest payments on bonds, setting the stage for the company to file for bankruptcy protection, reported WWD.
Neiman’s has a five-day grace period on $72.9 million in interest payment due on bonds that mature in 2024, but one creditor said the retailer is in “radio silence” and that he expects a bankruptcy filing within days, the report said. Also, $5.7 million in interest was due Wednesday on bonds maturing in 2021, which Neiman’s has a 30-day grace period on.
Neiman Marcus Group is owned by Ares Management LLC and the Canada Pension Plan Investment Board, which together bought the business for $6 billion in 2013, bringing long-term debt up to $4.46 billion. The retailer has been paying around $300 million in annual interest expense, dragging down its profitability and resulting in losses, WWD said.
J.C. Penney on Wednesday skipped a debt payment and, in a filing with the Securities and Exchange Commission, said it is entering into a 30-day grace period “in order to evaluate certain strategic alternatives, none of which have been implemented at this time." Penney’s total debt is about $4.2 billion.