Neiman Marcus Group filed for Chapter 11 bankruptcy on Thursday, becoming one of the most prominent retailers to fold as the COVID-19 pandemic disrupts the economy.
Filing in a Houston federal court, the luxury department store chain and its creditors agreed on $675 million in financing to help Neiman Marcus while it tries to restructure during bankruptcy, the Financial Post reports. A second $750 million financing package from creditors would also completely refinance said financing, as well as supply extra liquidity for the company when it emerges from bankruptcy.
The deal will turn over the business to the creditors, who will become majority owners in the fall, once Neiman Marcus exits bankruptcy. The filing will help ease the company’s $4 billion debt.
Neiman Marcus was struggling long before the pandemic. The global health crisis worsened its issues, requiring the retailer to furlough the majority of its 14,000 workers and shutter its 43 Neiman Marcus stores. On Thursday, the retailer announced that some of its Neiman Marcus, Bergdorf Goodman, and Last Call store closures will be extended through May 31. Reports that the company was going to file for bankruptcy first surfaced in mid-April.
“Like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business,” CEO Geoffroy van Raemdonck said in a statement, per CNBC.
“The binding agreement from our creditors gives us additional liquidity to operate the business during the pandemic and the financial flexibility to accelerate our transformation," he added. "We will emerge a far stronger company.”
Neiman Marcus likely won’t be the last major retailer to close, at least temporarily. J. Crew filed for bankruptcy earlier this week, with CNBC reporting that J.C. Penney has also been exploring the option.
