After Reorganization Plan Is Approved, What’s Next for Neiman Marcus

Neiman Marcus’ reorganization plan has been given the green light.

On Friday in the United States Bankruptcy Court for Southern District of Texas’ Houston Division, a bankruptcy judge approved the high-end retailer’s debt-for-equity swap, which hands ownership of the department store chain to creditors in exchange for eliminating the majority of its borrowings.

The move clears the way for Neiman Marcus’ emergence from Chapter 11 proceedings, with a “substantially reduced” debt load and “significant” new funding in a strengthened capital structure. As part of the plan, the company expects to slash more than $4 billion of nearly $5.5 billion in existing debt and more than $200 million of interest expenses, with no near-term maturities. It added that certain institutional investors will fund a $750 million exit financing package that would fully refinance its debtor-in-possession loan and provide additional liquidity for its business.

Once all conditions have been finalized, as well as received full support from creditors and new equity shareholders, Neiman Marcus plans to exit bankruptcy by Sept. 30.

“Throughout this process, I’ve been so impressed by the commitment of our associates, who continue to extend passion and love for our customers,” chairman and CEO Geoffroy van Raemdonck said in a statement. “I’m also grateful to our brand partners for standing with us and believing in our business. I remain inspired by the opportunity to continue to surprise and delight our customers online, in-store and at home as we continue on our journey to become the preeminent luxury platform.”

He added, “Even in a continually evolving retail environment, we continue to succeed and exceed our budget. Neiman Marcus Group is positioned to win thanks to our differentiated and deep customer-associate relationships, the mutual trust of our lenders and brand partners, and our accelerated digital transformation.”

In the first week of May, Neiman Marcus filed for bankruptcy as the coronavirus pandemic forced the temporary closures of its namesake stores, as well as Last Call and Bergdorf Goodman outposts across the country. However, the retailer’s pressures had been years in the making: In a quest for profitability, Neiman Marcus had struggled in the face of digital disruption and reduced foot traffic. Two years ago, it announced a four-year transformation plan that involved investments in omnichannel and supply chain technology, as well as embracing the growing resale trend through a minority stake in consignment company Fashionphile.

To bolster its business, Neiman Marcus has secured a $900 million asset-based lending facility — led by Bank of America and a consortium of commercial banks — to continue operations as it gradually reopens stores, invests in fall inventory and funds the expansion of its digital platforms.

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