Neiman Marcus Group, the renowned department store retailer based in Dallas, has received approval from the U.S. Bankruptcy Court for a significant $675 million debtor-in-possession (DIP) financing package. This development marks a crucial phase in the company’s ongoing bankruptcy proceedings, which were initiated in May amidst the unprecedented challenges posed by the Covid-19 pandemic.
The DIP financing package includes an immediate availability of $250 million, along with an additional $150 million that can be accessed as needed after September 4, 2020. Neiman Marcus had previously obtained interim approval for $275 million when it filed for Chapter 11 bankruptcy earlier in May.
CEO and chairman Geoffroy van Raemdonck expressed his optimism about the financing, emphasizing that it provides ample liquidity to ensure business continuity for the company. He highlighted that the funds will support the gradual reopening of Neiman Marcus stores, investments in Fall inventory, and the expansion of its digital offerings. Van Raemdonck further reassured stakeholders that the company remains on schedule to emerge from the bankruptcy process in the fall of 2020.
Neiman Marcus was forced to file for bankruptcy after temporarily closing all its physical stores in mid-March due to the Covid-19 pandemic. Fortunately, the company reached a restructuring agreement with holders representing more than two-thirds of its outstanding debt at that time. This restructuring is expected to eliminate approximately $4 billion of existing debt, with no immediate maturity dates.
In recent weeks, Neiman Marcus has gradually reopened its brick-and-mortar locations, adopting measures such as curbside pick-up and private appointments. Currently, 90% of its store fleet is open to customers in some capacity. The company has experienced stronger-than-expected sales during the reopening process. However, revenue levels remain significantly lower compared to the pre-pandemic period, and the initial store closures during the early months of bankruptcy resulted in negative cash flow of approximately $300 million.
Nonetheless, Neiman Marcus remains steadfast in its commitment to both customers and luxury brand partners. The company aims to solidify its position as the leading luxury customer platform by investing in digital offerings and adapting to the evolving retail landscape. With the approval of the DIP financing, Neiman Marcus is well-positioned to navigate the uncertainties of the current climate and emerge even stronger in the future.