UPDATE: Sept. 28, 2020: Neiman Marcus officially emerged from Chapter 11 bankruptcy on Friday under new ownership. In a press release, CEO Geoffroy van Raemdonck said the luxury retailer's new owners — which include the investment firms PIMCO, Davidson Kempner Capital Management and Sixth Street — "understand the value of our brands and the opportunity for growth." He added that Neiman's new owners are also committed to sustainability issues, "where we intend to be a leader within the industry."
Dive Brief:
- Neiman Marcus received court approval last week for its plan to reorganize in Chapter 11.
- The luxury department store chain, which filed for bankruptcy in May, expects to emerge from the court process by the end of September, according to a press release.
- The court-approved plan would eliminate $4 billion in debt and $200 million in interest expense while leaving no near-term maturities, Neiman said in a press release.
Dive Insight:
Objections, fraud allegations, an arrest — Neiman's bankruptcy has been plenty eventful. Despite all that, the retailer is on track to do what it said early in the summer it expected to do: exit bankruptcy by the fall.
Not every retailer knocked into Chapter 11 this year — by some combination of debt load, flagging sales and virus disruption — was fortunate enough to have a deal lined up going into the process. Stage Stores and Pier 1, after failing to find a buyer, have liquidated. Stein Mart is likely on the same path. J.C. Penney flirted with an acquisition deal before talks stalled. (Penney now expects to be taken over by lenders, but details have yet to be ironed out and approved.)
The support by a cross section of Neiman's creditors signals that they see an entity worth keeping around underneath all that debt, which is a legacy of multiple private equity buyouts. The reorganization, however, has not gone uncontested. Unsecured creditors have challenged aspects of it at multiple points in the process. In general, they have pushed for a better payout on allegations that Neiman fraudulently moved its MyTheresa unit out from under its corporate umbrella and to an entity controlled by its private equity owners.
Leading the charge for the unsecured creditors was Daniel Kamensky, leader of the Marble Ridge hedge fund. Kamensky has been a vocal and litigious antagonist to Neiman since the MyTheresa move. This summer his years-long efforts were vindicated, after a consultant confirmed that Neiman Marcus was insolvent at the time of the MyTheresa transfer, a kind of smoking gun for a fraudulent conveyance claim. An independent board member at Neiman also confirmed there was likely a legal claim against the retailer. A settlement with unsecured creditors soon followed that would give them stock in MyTheresa as part of Neiman's bankruptcy plan.
Kamensky co-chaired the unsecured creditors committee during Neiman's Chapter 11 bankruptcy, until allegations surfaced that he tried to used his position to profit at the expense of his fellow unsecured creditors. At issue was Kamensky's plan to buy stock from other creditors who would prefer cash to selling their MyTheresa shares. Federal prosecutors alleged that he used his position to talk employees at the investment bank Jefferies from making a higher offer to the creditors. Over the course of about a month, Kamensky quit the creditor committee, moved to dissolve his hedge fund and, last week, was arrested on federal charges of fraud, extortion and obstruction of justice.
Meanwhile, Neiman's bankruptcy continues on as the retailer readies its exit, into a world still defined and made uncertain by the coronavirus and economy.
The company's exit plan turns control of the company over lenders and calls for a $750 million term loan along with Neiman's $900 million asset-based loan. "With the exit financing and existing ABL, the Company has the strategic capital available to support its business and transformation initiatives through emergence and beyond," the company said.
