NEW YORK CITY -- Neiman Marcus has filed for Chapter 11 bankruptcy, the luxury retail brand announced Thursday.
All of the company's stores are currently closed due to the coronavirus pandemic, and most of its 14,000 employees are furloughed.
The company operates 42 Neiman Marcus stores across the United States, including at Hudson Yards on Manhattan's West Side, as well as Bergdorf Goodman on Fifth Avenue.
As part of the process, Neiman Marcus Group has secured debtor-in-possession financing of $675 million from creditors to enable business continuity throughout proceedings.
The group said a significant majority of its creditors will undergo a financial restructuring, substantially reducing its debt load and interest payments and supporting continued operations during the COVID-19 pandemic and beyond.
The binding agreement with holders representing over two-thirds of the company's outstanding debt demonstrates broad commitment across creditor classes.
"Prior to COVID-19, Neiman Marcus Group was making solid progress on our journey to long-term profitable and sustainable growth," Chairman and CEO Geoffroy van Raemdonck said. "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. However, like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business."
Details on the RSA and Chapter 11 Proceedings
--Certain of the company's largest creditors have committed to fulfill $675 million in DIP financing during the Chapter 11 proceedings.
--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.
--Upon emergence, the Company's planned capital structure is anticipated to be long dated with no near-term maturities and to eliminate approximately $4 billion of its existing debt.
--The transaction is supported by the Company's existing shareholders and, pursuant to the agreement, the creditors participating in the RSA will become the majority owners of the Company.
--Prior to the commencement of the Chapter 11 proceedings, new boards of managers were established at two debtor entities, Mariposa Intermediate Holdings LLC and Neiman Marcus Group LTD LLC, to lead the debtors through the restructuring process. Each board of managers is chaired by Mr. van Raemdonck and includes at least one independent manager.
--The Company expects to emerge from the process in early Fall 2020.
--Mytheresa is not a part of the Chapter 11 proceedings and will continue to operate independently.
COVID-19 Business Update
Neiman Marcus Group also provided an update on the following actions to efficiently manage its business through the COVID-19 pandemic:
--Temporary closures of some Neiman Marcus, Bergdorf Goodman, and Last Call stores, have been extended through May 31 to protect the health and safety of customers and associates.
--The Company continues to leverage the strength of its e-commerce platforms, continuing to serve customers remotely and digitally through its associates and style advisors, as well as on the Neiman Marcus and Bergdorf Goodman websites and apps.
--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 based on COVID-19 developments.
--A total of 10 stores nationwide are now open for curbside pickup - all Texas Neiman Marcus stores, as well as Tampa, Las Vegas and Tysons Corner stores.
--On May 4, the Atlanta and NorthPark Neiman Marcus stores became available to customers by private appointment.
--The Company will continue to assess store closure decisions and will reopen stores as it is safe to do so based on the status of the pandemic. The Chapter 11 process will not impact the timing of store re-openings.