The luxury department store chain, Neiman Marcus Group, has been given the green light by the court to access $675 million in debtor-in-possession financing. This financing is crucial to the company’s operations as it goes through Chapter 11 bankruptcy proceedings and ensures that employees and vendors will be paid.
Headquartered in Dallas, Neiman Marcus has devised a plan to hand control over to its creditors in exchange for eliminating $4 billion in debt. With the current total debt standing at around $5 billion, this move is seen as a necessary step for the company’s survival. The Bankruptcy Court for the Southern District of Texas, Houston Division provisionally approved these “first day motions” just one day after Neiman Marcus filed for bankruptcy protection.
The primary catalyst for Neiman Marcus’ bankruptcy filing is the impact of the Covid-19 pandemic. Like many other retailers, the company was forced to temporarily shut down its stores, resulting in significant financial strain. By securing the debtor-in-possession financing, Neiman Marcus aims to reorganize its operations effectively and emerge from Chapter 11 proceedings by early fall.
Having started as a small store in Dallas in 1907, Neiman Marcus has grown to become a renowned luxury retailer across the United States. It is a sought-after destination for celebrities and affluent customers in search of high-end fashion items, including designer handbags and clothing.
Over the past 15 years, Neiman Marcus has undergone changes in ownership, being controlled by various private equity firms. In 2013, Ares Management Corp and the Canada Pension Plan Investment Board acquired the company through a $6 billion buyout financed by debt.
With the approval of debtor-in-possession financing, Neiman Marcus aims to successfully navigate through bankruptcy proceedings and reduce its substantial debt burden. The company’s goal is to emerge from this challenging period as a stronger and more financially stable organization.