As many expected, Dallas-based Neiman Marcus announced Thursday it would file for Chapter 11 bankruptcy protection.
Last month, the company missed several debt payments including one that only gave the company a few days to avoid defaulting. Standard & Poor’s said the company has nearly $5 billion in debt, including legacy debt from a 2013 $6 billion leveraged buyout by its owners, Ares Management Corp. and Canada Pension Plan Investment Board.
“This is not a liquidation of our business, but simply a process that allows our company to alleviate debt, access additional capital to run the business in these challenging times, and emerge a stronger company with the ability to better serve you and continue our transformation over the long term,” company CEO Geoffroy van Raemdonck said in a letter to customers.
As part of the filing, the company said it has obtained $675 million in financing from creditors to continue operations during the restructuring.
“These creditors have also committed to fulfill a $750 million exit financing package that
would fully refinance the DIP financing and provide additional liquidity for the business,” the company said.
“Prior to COVID-19, Neiman Marcus Group was making solid progress on our journey to long-term profitable and sustainable growth. We have grown our unrivaled luxury customer base, expanded our industry-leading customer relationships, achieved higher omni-channel penetration, and made meaningful strides in our transformation to become the preeminent luxury customer platform,” van Raemdonck said in a statement to the press. “However, like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business.”