In a move that was not unexpected, Neiman Marcus Group has filed for bankruptcy with an agreement that will eliminate about $4 billion of its debt and make its creditors the majority owners of its business.
Burdened with crushing debt and with its stores closed due to COVID-19, the luxury department store company is the second major retailer to file for bankruptcy during the pandemic, following a filing by J.Crew Group last week.
Neiman Marcus said it has secured $675 million in financing from its creditors to enable business operations through bankruptcy. The creditors have also committed to a $750 million financing package that would fully refinance that financing and provide additional liquidity for the business once it exits bankruptcy.
The retailer said it expects to emerge from bankruptcy in early fall, with its creditors as the majority owners in the business. It also said the Chapter 11 process will not impact the timing of its store reopenings.
Some of the biggest names in fashion were among the company's top 10 unsecured creditors, including Chanel Inc., Gucci America, Dolce and Gabbana USA, Stuart Weitzman Theory, and Christian Louboutin.
“Like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business,” stated CEO Geoffroy van Raemdonck. “The binding agreement from our creditors gives us additional liquidity to operate the business during the pandemic and the financial flexibility to accelerate our transformation. We will emerge a far stronger company. In a world that is changing, we are uniquely positioned to give our brand partners access to our loyal luxury customers like no other company.
Neiman Marcus also announced that the closure of some namesake, Bergdorf Goodman, and Last Call stores has been extended through May 31. A total of 10 stores nationwide are now open for curbside pickup – all Texas Neiman Marcus stores, as well as Tampa, Las Vegas and Tysons Corner stores. On May 4, the Atlanta and NorthPark Neiman Marcus stores opened to customers by private appointment.
“The company will continue to assess store closure decisions and will reopen stores as it is safe to do so based on the status of the pandemic,” Neiman Marcus stated.
Kirkland & Ellis LLP is serving as legal counsel to Neiman Marcus, Lazard Ltd. is serving as the company’s investment banker, and Berkeley Research Group is serving as the company’s financial advisor.