Neiman Marcus Files For Bankruptcy Under Chapter 11

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Neiman Marcus Group, a US-based luxury, multi-branded, omni-channel fashion retailer, has commenced voluntary Chapter 11 proceedings in the US Bankruptcy Court for the Southern District of Texas, Houston Division. The Group has secured debtor-in-possession (DIP) financing of $675 million from creditors to enable business continuity throughout proceedings.

The company has entered into a Restructuring Support Agreement (RSA) with a significant majority of its creditors to undergo a financial restructuring, substantially reducing its debt load and interest payments and supporting continued operations during the COVID-19 pandemic and beyond.

The binding agreement with holders representing over two-thirds of the company's outstanding debt demonstrates broad commitment across creditor classes. The voluntary filing under Chapter 11 is to implement the RSA, Neiman Marcus said in a media statement.

"Prior to COVID-19, Neiman Marcus Group was making solid progress on our journey to long-term profitable and sustainable growth. We have grown our unrivalled luxury customer base, expanded our industry-leading customer relationships, achieved higher omni-channel penetration, and made meaningful strides in our transformation to become the pre-eminent luxury customer platform. However, like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business," said Geoffroy van Raemdonck, chairman and chief executive officer of Neiman Marcus Group.

"My team and I appreciate the partnership and the steadfast support of all our stakeholders and Board of Directors through this process. The binding agreement from our creditors gives us additional liquidity to operate the business during the pandemic and the financial flexibility to accelerate our transformation. We will emerge a far stronger company. In a world that is changing, we are uniquely positioned to give our brand partners access to our loyal luxury customers like no other company. We will deliver that through the strength of our associate relationships and digital solutions," van Raemdonck added.

As per the RSA, certain of the company's largest creditors have committed to fulfil $675 million in DIP financing during the Chapter 11 proceedings. These creditors have also committed to fulfil a $750 million exit financing package that would fully refinance the DIP financing and provide additional liquidity for the business.

Upon emergence, the company's planned capital structure is anticipated to be long dated with no near-term maturities and to eliminate approximately $4 billion of its existing debt. The transaction is supported by the company's existing shareholders and, pursuant to the agreement, the creditors participating in the RSA will become the majority owners of the company.

Neiman Marcus conducts integrated store and online operations under the Neiman Marcus, Bergdorf Goodman, Neiman Marcus Last Call, and Horchow brand names. The company expects to emerge from the Chapter 11 process in early Fall 2020. Mytheresa is not a part of the Chapter 11 proceedings and will continue to operate independently.