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Neiman Marcus buckles under crushing $5B debt

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The scourge of Covid-19 has claimed yet another high-profile business victim.

The famed Neiman Marcus Group filed for bankruptcy protection on Thursday, marking one of the highest-profile collapses yet among retailers forced to temporarily close stores in response to the pandemic, CGTN.com reported.

The US luxury department store chain filed for bankruptcy in a federal court in Houston, and said it had reached agreement with creditors for US$675 million of debtor-in-possession financing to aid operations while it attempts to reorganize.

The Dallas-based retailer plans to cede control to creditors in exchange for eliminating US$4 billion in debt, the report said. Its debt currently totals about US$5 billion.

The company expects to emerge from Chapter 11 proceedings in early fall with a US$750 million package from creditors that provided its initial bankruptcy loan.

Neiman Marcus, laden with debt after a private equity takeover, reached a deal with creditors for more financial breathing room last year that avoided a bankruptcy filing but succumbed in recent weeks to government orders that closed businesses deemed non-essential to slow the spread of the novel coronavirus, the report said.

The pandemic is inflicting widespread financial pain on retailers forced to temporarily close stores. J. Crew Group filed for bankruptcy protection on Monday.

J.C. Penney is contemplating a bankruptcy filing of its own as a way to rework its unsustainable finances and Nordstrom recently moved to borrow against some of its real estate, the report said.

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