Neiman Marcus Group is reportedly ramping up its efforts to file for bankruptcy as the coronavirus outbreak continues to keep the retailer’s doors shuttered and stifle sales.
According to an exclusive report from Reuters that Neiman Marcus declined to confirm, the luxury department store chain is in discussions with bondholders about potential financing to help maintain its operations while under bankruptcy protection.
Sources who spoke with the news outlet suggested that the Dallas-based retailer is “several weeks away” from potentially going bankrupt. However, they added that creditors could extend the time for Neiman Marcus to make its debt payments due this month as restructuring talks are underway.
The report comes less than two weeks after Bloomberg indicated that Neiman Marcus was mulling whether to file for Chapter 11 protection. The report added that the company had begun engaging in preliminary talks with lenders about a bankruptcy loan to keep it going as a recovery plan is worked out.
“We are evaluating all courses of action to preserve our financial strength so that we may continue serving our customers and associates, and being a great partner to luxury brands globally,” a spokesperson told FN at the time.
Neiman Marcus declined to provide additional comments for this story.
Amid digital disruption and reduced foot traffic, the retailer has faced numerous struggles in its quest for profitability. In August 2018, it announced a four-year transformation plan that has entailed investing in omnichannel and supply chain technology, as well as embracing the growing resale trend through a minority stake in consignment company Fashionphile.
However, Neiman Marcus has a massive debt load of over $4 billion, much of which dates to its 2013 private equity buyout. It has looked into strategies for raising capital, including the potential sale or IPO of its MyTheresa e-commerce site.
Last year, the chain was able to rework its debt and avoid filing for bankruptcy, but the escalating coronavirus pandemic forced the company to shutter its Neiman, Last Call and Bergdorf Goodman banners over the past few weeks. A “large portion” of its workforce was either furloughed or deducted pay. CEO Geoffroy van Raemdonck is forfeiting his salary, while executives reporting directly to him waived a “significant amount” of their own base pay.
“This is a truly unprecedented time,” van Raemdonck said on Tuesday. “While these are the most difficult decisions to make, our focus is on ensuring our business is protected over the long term so we can continue serving our associates and customers.”
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