Neiman Marcus files bankruptcy; creditors support debt restructuring

By Caroline Salls

Pittsburgh, May 7 – Neiman Marcus Group Ltd. LLC filed Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the Southern District of Texas to implement a restructuring support agreement reached with a significant majority of its creditors to substantially reducing its debt load and interest payments and support continued operations during the Covid-19 pandemic and beyond, according to a news release.

As part of the Chapter 11 process, Neiman Marcus said it has secured a commitment for $675 million in debtor-in-possession financing from creditors to enable business continuity throughout the proceedings. The company said creditors who have committed to provide DIP financing have also committed to fulfill a $750 million exit financing package that would fully refinance the DIP facility and provide additional liquidity for the business.

The terms of the financing had not yet been filed as of Thursday afternoon.

“Prior to Covid-19, Neiman Marcus Group was making solid progress on our journey to long-term profitable and sustainable growth,” chairman and chief executive officer Geoffroy van Raemdonck said in the release. “However, like most businesses today, we are facing unprecedented disruption caused by the Covid-19 pandemic, which has placed inexorable pressure on our business.”

Creditor agreement

“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,” van Raemdonck said.

Upon emergence, the company’s planned capital structure is expected to be long dated with no near-term maturities and to eliminate about $4 billion of its existing debt, the release said.

Neiman Marcus said the restructuring transaction is supported by its existing shareholders, and the creditors participating in the restructuring support agreement will become the majority owners of the company.

The company said it expects to emerge from the Chapter 11 process in early fall.

Subsidiary Mytheresa is not a part of the Chapter 11 proceedings and will continue to operate independently.

New boards

New boards of managers were established at debtor entities Mariposa Intermediate Holdings LLC and Neiman Marcus Group to lead the debtors through the restructuring process, the release said. Each board of managers is chaired by van Raemdonck and includes at least one independent manager.

Neiman Marcus said it took actions to efficiently manage its business through the Covid-19 pandemic, including temporary closures of some Neiman Marcus, Bergdorf Goodman and Last Call stores. The company said those closures have been extended through May 31 to protect the health and safety of customers and associates.

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 those actions based on Covid-19 developments.

The company said the Chapter 11 process will not impact the timing of store re-openings as they are deemed safe.

Debt details

According to court documents, Neiman Marcus has $7,545,903,000 in assets and $6,786,722,000 of debt.

The company’s largest unsecured creditors are UMB Bank, NA of New York, with an $80.68 million senior notes claim and a $56.58 million senior notes claim; Monument Consulting of Richmond, Va., with a $10.44 million professional service fees claim; Rakuten Marketing LLC of New York, with a $7.84 million trade claim; Chanel Inc. of Piscataway, N.J., with a $6 million trade claim; Veronica Beard of New York, with a $4.34 million trade claim; La Mer of Melville, N.Y., with a $3.52 million trade claim; Gucci America of Secaucus, N.J., with a $3.16 million trade claim; Dolce and Gabbana USA Inc. of Secaucus, N.J., with a $2.71 million trade claim; and Stuart Weitzman Inc. of Fort Lauderdale, Fla., with a $2.58 million trade claim.

Kirkland & Ellis LLP is serving as legal counsel to the company, Lazard Ltd. is serving as investment banker, and Berkeley Research Group is serving as financial adviser.

Neiman Marcus is a Dallas-based department store and catalog retailer. The Chapter 11 case number is 20-32519.

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