Neiman Marcus Group, one of the largest retailers in the United States, is reportedly ready to file bankruptcy amid the COVD-19 pandemic a...
Neiman Marcus Group, one of the largest retailers in the United States, is reportedly ready to file bankruptcy amid the COVD-19 pandemic after defaulting millions in bond payments last week and furloughing 14,000 employees.
Neiman Marcus would become the first major US department store to crumble amidst the economic set backs from the coronavirus outbreak.
Reuters reported the company had few options after the coronavirus spurred lockdowns that shuttered non-essential businesses, including all 43 of their stores.
This includes Last Call stores and its two New York City Bergdorf Goodman department stores.
Neiman Marcus group is prepared to file for bankruptcy after financially struggling for years, Reuters reports
Neiman Marcus has struggled to stay afloat with brick-and-mortar stores as consumer shopping increasingly shifts online.
The company is around $5billion in debt and is reportedly in the final stages of brokering a deal with its creditors, which could help keep some operations going during bankruptcy proceedings.
The official bankrupt filing could happen in a matter of days, sources told Reuters.
The bankruptcy on the horizon comes just days after Neiman Marcus Group defaulted on millions of dollars in interest payments to creditors on Wednesday.
Neiman Marcus skipped interest payments to creditors on Wednesday that are reportedly in the millions of dollars
WWD reported that Neiman Marcus had a five-day grace period on $72.9million in interest payments for bonds maturing in 2024.
An additional $5.7million in interest was also due Wednesday on bonds maturing in 2021, and the company has a 30-day grace period for that.
Neiman Marcus has tried to push off potential bankruptcy by extending payment due dates with creditors, but doing so actually added to the company's interest expenses.
Signs of trouble were visible as early as 2013, when the retailer was part of a $6billion leverage buyout by the Canada Pension Plan Investment Board and equity firm Ares Management Corp.
In 2017, Neiman Marcus dropped its plans to go public and enter shares on the stock exchange as sales worsened.
At the time Neiman Marcus CEO Geoffroy van Raemdonck blamed declining sales on low customer loyalty.
Neiman Marcus closed as 43 of its stores due to lockdown orders during the COVID-19 outbreak that ordered all non-essential businesses temporarily close
Pictured: New York City Fire Department (FDNY) and Emergency Medical Technicians (EMT) wearing personal protective equipment lift a man into an ambulance during an ongoing outbreak of the coronavirus disease in New York
Last year, a trustee for Neiman Marcus Groups' bondholders sued the company over allegations that firm robbed investors of gaining value from its luxury e-commerce site, MyTheresea.
Neiman Marcus denied those allegations and said their business dealings were proper.
Once bankrupt, Neiman Marcus could attract the attention of interested buyers who want to purchase the Dallas-based company.
Hudson’s Bay Co, owner of Saks Fifth Avenue, previously explored a bid for Neiman Marcus in 2017 but did not commit, Reuters reports.
The bankruptcy announcement comes just weeks after the company furloughed a 'large portion' of 14,000 employees
Van Raemdonck said in a statement that company stores would remain closed until April 30.
Van Raemdonck reveled he could waive his entire salary, as well as other executives taking 'significant' pay cut.
'While these are the most difficult decisions to make, our focus is on ensuring our business is protected over the long-term so we can continue serving our associates and customers,' he said.
Unemployment in the US has surged during the pandemic, with some 22 million people out of a job overall.
Other major chain stores like Macy's, J.C. Penney and Best Buy have taken massive financial blows that have not improved during the outbreak.
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