Neiman Marcus to Become First Major U.S. Department Store to File for Bankruptcy amid COVID-19
The luxury retail chain furloughed many of its 14,000 workers last week after skipping out on millions of dollars in debt payments
One of America’s largest retailers is crumbling under the economic pressures brought on by the novel coronavirus (COVID-19) pandemic.
According to several reports, Neiman Marcus is to become the first major U.S. department store to file for bankruptcy.
The debt-laden company had limited options after being forced to close all 43 of its Neiman Marcus locations, nearly two dozen Last Call stores and its two Bergdorf Goodman stores in New York — due to the crisis and orders to close non-essential businesses, Reuters reports.
Sources told the outlet that the bankruptcy protection filing could happen this week and that the company is also in the final stages of negotiating a loan with its creditors that totals hundreds of millions of dollars to help sustain some of its operations throughout the bankruptcy proceedings.
A representative for Neiman Marcus did not immediately respond to PEOPLE’s request for comment.
The luxury retail chain has been struggling financially for years, and just last week furloughed many of it 14,000 employees, as well as skipped millions of dollars in debt payments, according to Reuters.
Neiman Marcus reportedly had a five-day grace period on $72.9million in interest payments for bonds maturing in 2024, WWD reported last week. They also had an additional $5.7million in interest due on Wednesday for bonds maturing in 2021, with a 30-day grace period for that.
According to Reuters, the company had tried to avoid filing for bankruptcy last year when they pushed back due dates on its payments in a restructuring deal with their creditors. However, that transaction ended up increasing their interest expenses.
The Dallas-based company has a borrowings total of about $4.8 billion, according to credit rating firm Standard & Poor’s. Some of that debt is left over from its $6 billion buyout in 2013 by its owners, private equity firm Ares Management Corp and Canada Pension Plan Investment Board (CPPIB).
While Neiman Marcus may be the first to fall, other department stores have also felt the effects of the economic downfall, and are fighting to avoid the same fate.
Macy’s and Nordstrom have been working to find new financing options. Meanwhile, J.C. Penney Company Inc. has enough funds to survive the upcoming months without filing for bankruptcy, however, they are reportedly still considering it as a way to help them restructure their finances and save money on debt payments.
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