May 7, 2020
Luxury department store chain Neiman Marcus files for bankruptcy
May 7, 2020
Neiman Marcus Group filed for bankruptcy protection on Thursday, marking one of the highest-profile collapses yet among retailers forced to temporarily close stores in response to the COVID-19 pandemic.
Neiman Marcus, which filed for bankruptcy in a Houston federal court, said it reached agreement with creditors for $675 million of debtor-in-possession financing to aid operations while it attempts to reorganize.
The luxury department store chain follows J. Crew Group Inc, which filed for bankruptcy protection on Monday with a plan to hand over control to lenders.
Dallas-based Neiman Marcus also said it would cede control to creditors under the agreement that will eliminate $4 billion of debt. Its debt currently totals about $5 billion.
Reuters earlier reported that the company was preparing to file for bankruptcy within days.
Neiman Marcus, laden with debt after a private equity takeover, reached a deal with creditors for more financial breathing room last year that avoided a bankruptcy filing but succumbed in recent weeks to government orders that closed businesses deemed non-essential to slow the spread of the coronavirus.
“Like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business,” Chief Executive Officer Geoffroy van Raemdonck said.
The nearly 113-year-old company in March furloughed many of its roughly 14,000 employees and temporarily closed all its 43 Neiman stores, two Bergdorf Goodman locations in New York and roughly two dozen Last Call stores.
It skipped debt payments in April, including one that only gave the company a five-day grace period to make good before defaulting.
The company said it expects to emerge from the process in early fall this year.
© Thomson Reuters 2021 All rights reserved.