Neiman emerges from bankruptcy with less debt to weather retail turmoil

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Neiman Marcus has officially emerged from bankruptcy, a process that has left the upscale department store with lighter debt and new owners to contend with the same industry trends that led to its financial difficulties.

The new Neiman Marcus Holding Company Inc. emerged from Chapter 11 bankruptcy protection on Friday, saying it had eliminated more than $4 billion in existing debt. Stakes formerly held by Ares Management Corp. and the Canada Pension Plan Investment Board, which took on debt in a leveraged buyout in 2013, have also disappeared. The Dallas-based company is now owned by Pacific Investment Management Co., Davidson Kempner Capital Management and Sixth Street Partners.

With the financial cleanup complete, Neiman Marcus and its Bergdorf Goodman store still have to deal with the fallout of the pandemic, defections from shoppers to online merchants and young customers’ preference for experiences over objects.

Bloomberg Intelligence analyst Mike Campellone said the current environment for a luxury fashion retailer is not ideal. “The bankruptcy process has helped reduce the company’s debt burden, but there’s still a long way to go to determine where the luxury apparel space is headed,” he said.

Impact of the pandemic

The company has been particularly affected by the pandemic. Neiman stores across the United States have been closed and workers laid off to help stop the spread of the coronavirus, although locations have gradually begun to reopen. The company filed for court protection in May.

The new owners “understand the value of our brands and the opportunities for growth,” said Geoffroy van Raemdonck, the CEO who retained his position during the bankruptcy process and will now lead the turnaround effort.

Some of Neiman’s creditors and retail peers couldn’t say the same. Lord & Taylor has held exit sales and Stein Mart Inc. is being dismantled. Marble Ridge Capital, a creditor that peppered Neiman Marcus with objections to its debt maneuvers before and after filing for bankruptcy, is being liquidated after co-founder Dan Kamensky’s tactics resulted in criminal charges.

The three new investment managers controlling Neiman Marcus are funding a $750 million exit plan to refinance a loan and add cash to the business, the statement said.

“While the unprecedented business disruption caused by COVID-19 has presented many challenges, it has also given us the opportunity to reinvent our platform and improve our business, van Raemdonck said. “We are emerging from Chapter 11 as a stronger and more innovative retailer, brand partner and employer.”

Neiman Marcus also has a new board of directors, made up of six members. Alongside van Raemdonck are Pauline Brown, the former president for North America of LVMH Moët Hennessy Louis Vuitton SE, and Kris Miller, the former chief strategy officer of eBay Inc., among others.

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