Neiman Marcus Group Inc. filed for Chapter 11 protection from bankruptcy Thursday due to mounting debt and the economic shutdown related to COVID-19.
Headquartered in Dallas, the upscale fashion chain has 43 namesake stores, including locations at the Westfield Topanga and the Village shopping center in Canoga Park and the Camarillo Premium Outlets mall. Both are temporary closed under the state’s nonessential business restrictions and could not be reached for comment by the Business Journal.
“Like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business,” said Chief Executive Geoffroy van Raemdonck in a statement.
In a press release announcing the filing, Neiman Marcus specified it does not expect mass store closures and plans to emerge from Chapter 11 this fall.
“We will emerge a far stronger company,” said van Raemdonck.
Burdened by nearly $5 billion in debt, the 112-year-old luxury banner was struggling even before the pandemic. Chapter 11 will buy it time to reorganize, but turnaround efforts will be complicated by the ongoing closure of most brick-and-mortar stores and the furlough of in-store employees. Just 10 Neiman Marcus locations are open for curbside pickup as some states have loosened business restrictions.
To continue operating during the Chapter 11 proceedings, Neiman Marcus has tapped creditors for $675 million in debtor-in-possession financing and a $750 million exit package that would fully refinance the DIP credit and provide some extra liquidity.
Neiman Marcus was purchased in 2013 by L.A. asset management firm Ares Management and the Canada Pension Plan Investment Board for $6 billion.
The virus has hit high-end clothing retailers hard. Earlier this week, J Crew Group entered Chapter 11, becoming the first major retailer to seek protection from creditors because of the pandemic. Also, in April, J.C. Penny defaulted on a $12 million debt payment, rousing speculation regarding a possible Chapter 11 filing in the future.