As part of a Restructuring Support Agreement (RSA) with “a significant majority of its creditors,” Neiman Marcus Group has filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division. As part of the process, the retailer has secured $675 million in debtor-in-possession financing from its creditors to enable business continuity through the bankruptcy proceedings.
The RSA agreement represents more than two-thirds of the company’s outstanding debt and “demonstrates broad commitment across creditor classes,” according to a company statement. Upon emergence from bankruptcy, Neiman Marcus’ planned capital structure is anticipated to be long dated with no near-term maturities, and to eliminate approximately $4 billion of the company’s existing debt.
“Prior to COVID-19, Neiman Marcus Group was making solid progress on our journey to long-term profitable and sustainable growth,” said Geoffroy von Raemdonck, Chairman and CEO of Neiman Marcus Group, in a statement. “However, like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business.”
Von Raemdonck is optimistic that the company, which includes the Neiman Marcus, Bergdorf Goodman, Neiman Marcus Last Call and Horchow brands, will emerge from bankruptcy “a far stronger company.” He added that the binding agreement from creditors “gives us additional liquidity to operate the business during the pandemic and the financial flexibility to accelerate our transformation.”
Temporary closures of some brick-and-mortar stores will continue through May 31, although Neiman Marcus is continuing to sell through e-Commerce platforms. A total of 10 stores in Texas, Tampa, Fla., Las Vegas and Tysons Corner, Va. are open for curbside pickup. On May 4, the Atlanta and NorthPark Neiman Marcus stores opened for private appointments with customers. The company plans to reopen stores as it’s safe to do so, and said the Chapter 11 process will not impact the timing of these openings.