The move was announced Thursday and follows the Chapter 11 Bankruptcy filing of J.Crew, the first major retailer to reorganize during the coronavirus pandemic. Sadly, the experts expect to see more Chapter 11 filings as more and more businesses reopen.
“Prior to COVID-19, Neiman Marcus Group was making solid progress on our journey to long-term profitable and sustainable growth,” said Neiman Marcus Group CEO Geoffroy van Raemdonck in a statement. “However, like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business.”
The Dallas-based chain filed for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, according to NBC News.
The company says it expects to emerge from bankruptcy sometime in the fall. Like other nonessential businesses, it temporarily closed its 43 stores in mid–March. As some states started relaxing lockdown orders, Neiman Marcus was able to open 10 stores for curbside pickup.
As a condition of the bankruptcy filing, Neiman Marcus has secured $675 million in financing from creditors to keep operating during the restructuring of the business. This amounts to over two-thirds of the company’s debt.
The bankruptcy filing is a big blow to Ares Management and the Canada Pension Plan Investment Board, which bought Neiman Marcus in 2013 for $6 billion.
“Department stores have been struggling for a long time,” said Craig Johnson, president of Customer Growth Partners, a retail consultancy. “Now, it’s a bloodbath. How many will survive is unclear.”
