Last month, word surfaced that luxury retailer, Neiman Marcus, was going to file bankruptcy and today it was made official. Neiman Marcus filed for Chapter 11 making them the first major department store to collapse during the corona virus outbreak. Last year, Barney’s filed for bankruptcy and closed their chain of stores, but Neiman Marcus CEO Geoffroy Van Raemdonck, assured that wont be happening. Instead of liquidating, Neiman Marcus has entered into reconstructing proceedings that will reduce their debt for a stronger outcome. The company took to Twitter to release a letter to consumers stating where the company stands during this difficult time and their plan for the future.
Recent reports are circulating that Neiman Marcus has been in debt for quite some time, the pandemic just accelerated the bankruptcy filing. The department store has struggled to pay down a $5 billion debt from buyouts in 2005 and 2013. Retailers all over are taking hits to their businesses, not just the big brand companies. 43 Neiman Marcus stores, as well as their Bergdorf Goodman and Last Call outlets had to close their locations due to the pandemic, but plan on reopening later this year. So what exactly does this mean for the luxury retailer? Filing bankruptcy doesn’t always mean companies go completely out of business. The reconstructing agreement simply means old debts will be shed as well as liabilities that can’t be afforded. $675 million was secured from creditors to cover costs during the bankruptcy proceedings that can last all through fall.
“This is simply a process that allows our company to alleviate debt, access additional capital to run the business during these challenging times, and emerge a stronger company with the ability to better serve you and continue our transformation over the long term.”Neiman Marcus CEO Geoffroy van Raemdonck
Last modified: May 8, 2020