With the COVID-19 pandemic causing it to shutter its stores, Neiman Marcus Group is increasing preparations to ask for bankruptcy protection. The luxury department store retailer reportedly started having private discussions with bondholders regarding potential financing that would assist it with ongoing operations during bankruptcy protection, Reuters reported, citing unnamed sources.
Nieman came to an arrangement with creditors in 2019 to rework debt and steer clear of a bankruptcy filing. The COVID-19 outbreak, however, forced the company to shutter the Neiman, Last Call and Bergdorf Goodman locations it operates until at least the end of this month, while furloughing most of its 14,000 staffers. The closings have led to a cash crunch ahead of significant interest payments coming due.
Neiman had received questions from creditors regarding its future plans up to this week, but it had not started talks about a potential bankruptcy, per some of the unnamed sources in the report. While bankruptcy discussions are commencing now, the actual proceedings are likely several weeks away, and are not a foregone conclusion.
The company noted in March that it was “evaluating all courses of action to preserve our financial strength” due to the COVID-19 situation. As previously reported, the retailer was forced to furlough some of its staffers and make temporary pay cuts after shuttering its stores, per CEO Geoffroy van Raemdonck.
Neiman’s digital marketplace will stay open.
Van Raemdonck noted that the action of shuttering the shops was intended to prevent the spreading of the virus. Employment-related measures have now been taken to contend with the fiscal shortfalls to come.