Neiman Marcus Skips Bond Payment

NEW YORK, United States — Neiman Marcus Group skipped a bond payment due this week to Marble Ridge Capital LP, according to a letter the hedge fund sent the luxury retailer on Thursday, setting the heavily indebted chain on a path toward bankruptcy.

Neiman Marcus has been advancing preparations for bankruptcy, Reuters reported this month, and missing an interest payment means the company is in default with its creditors, according to the letter.

The coronavirus pandemic has inflicted severe financial distress on US department stores, which were attempting turnarounds to compete with e-commerce competitors prior to the crisis.

Neiman Marcus closed its approximately 40 stores last month, though it is fulfilling online orders from some of them. The company furloughed the majority of its 14,000 employees.

"Sadly, Neiman's financial distress will come as a surprise to no one," Marble Ridge wrote in its letter, seen by Reuters.

A spokesman for Neiman Marcus declined to comment.

A Neiman bankruptcy filing would likely be contentious. A trustee for some of the company's bondholders, including Marble Ridge, sued Neiman last year, claiming the company and its owners robbed investors of the value of luxury e-commerce site MyTheresa in the earlier debt restructuring.

The retailer, with roughly $4 billion in debt, had been discussing financing options with its creditors that would allow it to stay open in bankruptcy.

Most debt obligations have grace periods during which borrowers can make the payment. Neiman could still make the payment, buying more time to prepare for bankruptcy.

The retailer has struggled following a $6 billion leveraged buyout by private equity firm Ares Management Corp and the Canada Pension Plan Investment Board in 2013.

Department store Macy's Inc also tapped advisers for help managing its liabilities, while J C Penney Company Inc is exploring filing for bankruptcy.

By Jessica DiNapoli; Editor: Dan Grebler