Daniel Kamensky, the founder and manager of New York-based hedge fund Marble Ridge Capital was arrested and charged in Manhattan federal court on Thursday with securities fraud, wire fraud, extortion and obstruction of justice — all of which are related to Neiman Marcus Group Inc.’s high-profile May bankruptcy.
Federal prosecutors allege Kamensky carried out a scheme to pressure a rival bidder to abandon its higher bid for assets — presumably shares of MyTheresa’s e-commerce business that were part of the high-end department store’s bankruptcy proceedings — so that Marble Ridge could obtain those assets for a lower price. Kamensky, according to prosecutors, then attempted to persuade the rival bidder to cover up the scheme.
At the outset of the Neiman Marcus bankruptcy, Marble Ridge, through Kamensky, applied to be on the Official Committee of Unsecured Creditors and was appointed soon after. During the bankruptcy process, the committee had negotiated with the owners of Neiman Marcus to obtain certain securities, or MyTheresa Series B Shares, and ultimately, the committee was successful in coming to a settlement to obtain 140 million shares of those securities, which were to benefit certain unsecured Neiman creditors.
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In July 2020, federal prosecutors say Kamensky was negotiating with the committee for Marble Ridge to offer 20 cents per share to purchase those securities from any unsecured creditor who preferred to receive cash, rather than MyTheresa Securities, as part of that settlement.
“On July 31, 2020, Kamensky learned that a diversified financial services company headquartered in New York informed the committee that it was interested in bidding a price between 30 and 40 cents per share — substantially higher than Kamensky’s bid — to purchase the MyTheresa securities from any unsecured creditor who was interested in receiving cash,” reads the federal complaint. “That afternoon, Kamensky sent messages to a senior trader at the investment bank telling him not to place a bid.”
The investment bank soon after decided to not make a bid to purchase MyTheresa securities, according to federal prosecutors.
Late last month, Marble Ridge Capital LP confirmed with FN its plans to shut down after an investigation by the U.S. government determined that Kamensky, who serves as a managing partner, attempted to interfere with Neiman Marcus’s bankruptcy auction. In a letter to clients that was obtained by multiple media outlets, the investment firm announced that it would “wind down” its funds and “manage the liquidation in the best interests of our investors.”
On Aug. 20, reports emerged that Kamensky admitted to a “grave mistake” to the Department of Justice’s U.S. Trustee division, which oversees bankruptcies.
On May 7, Neiman Marcus — whose pressures have been years in the making — went bankrupt following weeks of speculation as the coronavirus pandemic forced the temporary closures of its Neiman Marcus, Last Call and Bergdorf Goodman banners across the country.
On Thursday, the chain submitted a third draft of its bankruptcy plan, scheduled for a confirmation hearing today.
Just this week, Neiman added another two stores to the list of outposts slated for closure: It said on Sept. 2 that it will permanently shut down its full-line stores in Natick, Mass., and Walnut Creek, Calif. Those locations are expected to continue operations into 2021, with exact closing dates yet to be announced.
That news came a week after Neiman Marcus announced the closure of its 130,000-square-foot outpost in the Mazza Gallerie shopping center in Washington, D.C., expected to shutter this month.
The retailer also previously said it would close its stores at Bellevue, Wash., as well as those in Fort Lauderdale and Palm Beach, Fla., plus the one in the massive Hudson Yards development. It will also exit 17 Last Call outlets.