Neiman Marcus’ private-equity owners have agreed to surrender part of the Mytheresa business as the retailer seeks to exit bankruptcy proceedings ahead of the holiday shopping season.
On Thursday, United States Bankruptcy Judge David Jones accepted Ares Management Corp. and the Canada Pension Plan Investment Board’s proposal, which details a transfer of 140 million shares of the online luxury marketplace to Neiman Marcus’ unsecured creditors. (The owners maintain majority control of Mytheresa.)
As part of the tentative proposal, eight executives on the Neiman Marcus leadership team — including CEO Geoffroy van Raemdonck and COO Chris Sim — could receive a bonus totaling up to $10 million for meeting certain targets related to the company’s performance.
The settlement requires final approval in Texas bankruptcy court. If its given the green light, it paves the way for the retailer to get confirmation for its reorganization plan by mid-September.
Watch on FN
Mytheresa’s ownership has been in dispute over the past several years: The digital arm of Munich fashion store Theresa, founded by Christoph and Susanne Botschen in 1987, was acquired by Neiman Marcus Group Ltd. in 2014. Four years later, Neiman Marcus Group transferred the subsidiary to parent holding company The Neiman Marcus Group Inc., which is owned by Ares and the CPPIB.
Opposing creditors had argued that the shuffling of Mytheresa cost Neiman Marcus Group Ltd. its “billion-dollar crown-jewel asset” — particularly as the department store was facing a high risk of default due to debt stemming from the private-equity buyout. According to a litigation expert hired by the creditors’ committee, Mytheresa was worth about $822 million at the time it was transferred out of Neiman Marcus Group.
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.
Now, as it seeks an exit from Chapter 11 proceedings, the Dallas-based chain aims to alleviate its debt load, which could result in the trimming of its brick-and-mortar fleet. Last week, Neiman Marcus confirmed that it would shutter its location in New York’s Hudson Yards development. It also plans to close units in Bellevue, Wash.; Palm Beach, Fla.; and Fort Lauderdale, Fla; as well as 17 Last Call outlets.