Neiman Marcus files for bankruptcy amid Covid-19 pandemic
8 May 2020
After J.Crew, Neiman Marcus Group Ltd LLC has commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division. As part of the process, the company said in a statement, Neiman Marcus Group has secured debtor-in-possession (DIP) financing of 675 million dollars from creditors to enable business continuity throughout proceedings.
Commenting on the development, Geoffroy van Raemdonck, Chairman and Chief Executive Officer of Neiman Marcus Group stated: “Prior to Covid-19, Neiman Marcus Group was making solid progress on our journey to long-term profitable and sustainable growth. However, like most businesses today, we are facing unprecedented disruption caused by the pandemic, which has placed inexorable pressure on our business.”
Neiman Marcus receives funds to manage business through bankruptcy proceedings
The company has entered into a Restructuring Support Agreement (RSA) with a significant majority of its creditors to undergo a financial restructuring, substantially reducing its debt load and interest payments and supporting continued operations during the Covid-19 pandemic and beyond. It expects to emerge from bankruptcy this fall, at which point its creditors will become majority owners of the business.
The company added that some of the company’s largest creditors have committed to fulfil 675 million dollars in DIP financing during the Chapter 11 proceedings and a 750 million dollars exit financing package that would fully refinance the DIP financing and provide additional liquidity for the business.
To manage business through the pandemic, the company has also announced that temporary closures of some Neiman Marcus, Bergdorf Goodman, and Last Call stores, have been extended through May 31 to protect the health and safety of customers and associates. The company further said that furloughs or temporary salary reductions have been put into effect for a large portion of associates through at least May 31 with the potential to either extend or shorten based on COVID-19 developments.
Picture credit:Neiman Marcus