Neiman Markus file bankruptcy protection claims
The Dallas-based retailer Neiman Marcus group filed for bankruptcy on Thursday , became the first major department store to do so during the coronavirus pandemic. Neiman Marcus has filed for chapter 11 bankruptcy. The company operates 43 Neiman Marcus stores across the United States, including at Hudson Yards on Manhattan’s West Side, as well as Bergdorf Goodman on Fifth Avenue.
The 113 Years old retailer chain Neiman Marcus has struggled to pay down nearly $5 billion in debt, much of it from leveraged buyouts in 2005 and 2013. The pandemic has forced it to temporarily shutter all of its stores and furlough the majority of its 14,000 workers.
“We had a business that was on track prior to Covid-19,” Neiman Marcus Chief Executive Geoffroy van Raemdonck said in an interview. “Everything was going well in our transformation, but we had massive interest payments. Covid threw everything off track. This is an opportunity to reset our financial structure.”
The bankruptcy filing, in the Southern District of Texas, Houston Division, seeks to eliminate $4 billion of roughly $5.1 billion in debt. The creditors will become majority owners of the retailer, which has been controlled by private-equity firms. Neiman isn’t planning mass store closings or asset sales as part of the restructuring.
Neiman has secured $675 million debtor-in-possession financing from creditors holding over two-thirds of the company’s debt. The creditors have also committed to $750 million in exit financing that would refinance the DIP and provide additional funding for the business.
Neiman is famous for selling $5,000 evening gowns and $3,000 designer handbags, as well as for producing a holiday catalog filled with exotic gifts. It was a retail pioneer with a status-conferring charge card. It embraced online shopping, and derived one-third of its sales from the web. Last year, it opened its first New York City outpost in the flashy Hudson Yards development.
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But behind the glitz, Neiman Marcus struggled under $5.1 billion in debt, the burden of two successive leveraged buyouts. Servicing the debt consumed most of its operating profits in recent years, Mr. van Raemdonck said.
Neiman closed its stores in March and furloughed many of its 14,000 workers, while reducing hours and pay for the rest. Currently, 10 stores are now open for curbside pickup, including stores in Texas.
(Read more at – Fox Business)