Neiman Marcus advances bankruptcy preparations, sources say

A contractor enters a Neiman Marcus Team Ltd. keep at the Hudson Yards growth in New York, U.S., on Tuesday, March 5, 2019.

Demetrius Freeman | Bloomberg | Getty Images

Neiman Marcus is stepping up preparations to look for individual bankruptcy protection, following the coronavirus pandemic pressured the financial debt-laden U.S. luxury division retailer chain to near its retailers, folks acquainted with the issue stated on Thursday.

Neiman commenced keeping confidential discussions this 7 days with bondholders about feasible financing that would help the business proceed running whilst beneath personal bankruptcy safety, the resources stated. The organization has also started out very similar discussions in modern days with its creditors, a person of the resources mentioned.

Up until eventually this 7 days, Neiman had obtained inquiries from creditors about its future moves but had not commenced conversations about a feasible personal bankruptcy, some of the resources mentioned.

Even however these talks are advancing, the Dallas-centered retailer is numerous months away from a prospective personal bankruptcy, and it is continue to probable that it manages to escape it, the sources explained.

Lenders could give Neiman further time to make upcoming credit card debt payments thanks this thirty day period whilst restructuring conversations continue on, which could final result in a transaction that reworks fiscal obligations outside of individual bankruptcy proceedings, the sources added.

The resources questioned not to be identified due to the fact the make any difference is private. Neiman declined to remark. Last month, the corporation claimed it was “analyzing all programs of motion to maintain our monetary toughness” since of the coronavirus pandemic.

Neiman reached a offer final calendar year with creditors to rework debt and keep away from a bankruptcy filing, gaining extra economic breathing home. But the coronavirus outbreak forced the firm to shut all Neiman, Bergdorf Goodman and Final Connect with stores it operates by way of the conclude of April, and furlough most of its 14,000 workforce.

The closures have resulted in a income crunch just in advance of major interest payments on portions of its more than $4 billion of financial debt are owing commencing April 15.

Portions of Neiman Marcus’s term mortgage have been trading at approximately 40 cents on the dollar this week, properly underneath deal with price, indicating considerable investor fears about compensation, according to Refinitiv Eikon data. The cost for a set of Neiman bonds has also fallen.

Neiman has struggled pursuing a $6 billion leveraged buyout by personal-fairness agency Ares Management and Canada Pension Plan Expense Board in 2013. Like numerous conventional brick-and-mortar suppliers, it has faced relentless levels of competition from e-commerce large Ares had no fast remark, when the CPPIB did not promptly reply to a ask for for comment.

Neiman was able to persuade collectors to restructure credit card debt previous yr with no resorting to bankruptcy proceedings, pushing out thanks dates on its fiscal obligations. But the offer added to the company’s fascination bills on debt, and did not handle its struggling business enterprise, which has worsened.

A Neiman bankruptcy filing would likely be contentious. A trustee for some of the firm’s bondholders sued Neiman previous year, boasting the enterprise and its homeowners robbed traders of the price of luxury e-commerce web-site MyTheresa in the earlier financial debt restructuring.

“If this storied brand name documents for personal bankruptcy … MyTheresa will acquire heart phase,” said Dan Kamensky, managing companion at Marble Ridge Funds LP, 1 of the bondholders. “The non-public equity proprietors stripped the … MyTheresa asset from the business without paying a dime and leaving a carcass of a company for its lenders.”

Neiman has said the allegations are meritless and that its handling of MyTheresa was appropriate.

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