Why Neiman Marcus could file for bankruptcy very soon
Neiman Marcus Group is preparing a bankruptcy-protection filing and could become the first major US department store to fall victim to the economic climate caused by COVID-19. This will most probably happen this week, according to a person, who is close to the situation.
The Dallas-based luxury retail chain has been struggling financially for years. The situation got worse due to the coronavirus outbreak, sources said.
Neiman Marcus has hired Berkeley Research Group and Boston Consulting Group. BCG is charged with looking into three options: sell the business, shrink the chain by half the stores and keep operating, or a total liquidation.
The pandemic has forced the company to temporarily shut all 43 of its Neiman Marcus locations, roughly two dozen Last Call stores and its two Bergdorf Goodman stores in New York City.
Reuters first reported the news of the imminent filing and noted that the company is in the final stages of negotiating a loan with its creditors totaling hundreds of millions of dollars.
Neiman Marcus’ borrowings total about $4.8 billion, according to credit ratings firm Standard & Poor’s. Some of this debt is the legacy of its $6 billion leveraged buyout in 2013 by its owners, private equity firm Ares Management Corp and Canada Pension Plan Investment Board.
It has also furloughed many of its roughly 14,000 employees - and skipped millions of dollars in debt payments last week, according to Reuters.
Other department store operators that have also had to close their stores like Macy’s and Nordstrom Inc have been rushing to secure new financing, such as by borrowing against some of their real estate. JC Penney Co is also contemplating a bankruptcy filing as a way to rework its unsustainable finances and save money on looming debt payments, writes NY post.
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