Luxury department store chain Neiman Marcus Group Ltd. LLC has filed for bankruptcy protection citing the severe impact of coronavirus or COVID-19 pandemic on its business.
In a statement, Neiman Marcus Group said it has entered into a Restructuring Support Agreement or RSA with a significant majority of its creditors to undergo a financial restructuring. The move is expected to substantially reduce its debt load and interest payments and support continued operations during the ongoing crisis and beyond.
Geoffroy van Raemdonck, Chairman and Chief Executive Officer of Neiman Marcus Group said, “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 COVID-19 pandemic, which has placed inexorable pressure on our business.”
The company, which comprises four luxury retailers – Neiman Marcus, Bergdorf Goodman, Last Call and Horchow, said it 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, Neiman Marcus Group has secured debtor-in-possession or DIP financing of $675 million from creditors to enable business continuity throughout proceedings. There is also a commitment of $750 million exit financing package that would fully refinance the DIP financing and provide additional liquidity for the business.
van Raemdonck noted that it is not a liquidation of the business, rather a simple process to alleviate debt and access additional capital to run the business during these challenging times.
The company said its business will continue as usual, and the Chapter 11 process will not impact the timing of store re-openings, which are already closed due to the worsening coronavirus spread. A total of 10 stores nationwide are now open for curbside pickup.
The company expects to emerge from the process in early Fall 2020. Upon emergence, the company’s planned capital structure would be long dated with no near-term maturities and would eliminate approximately $4 billion of its existing debt.
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