Neiman Marcus, privately held luxury department stores, is looking into bankruptcy protection according to individuals intimate with the subject. The company had already been under tremendous debt when the COVID-19 pandemic hit and forced it to close down all locations. The retailer has several weeks left before having to file for bankruptcy and may still pull through and avoid that route.
The company organized and held confidential meetings this past week, along with bondholders, to discuss financing options that would allow it to function under bankruptcy protection. Creditors had questioned Neiman on how it planned to proceed, but did not inquire about a potential bankruptcy, according to sources.
It is possible that Creditors will allow the company additional time to complete its pending payments while Neiman decides how to advance. According to the source, the stretch of time could amount to a new negotiation that modifies the financial situation within the company, without the need for bankruptcy.
Neiman refused to comment and sources asked not to be identified as the matter had been declared confidential. Nevertheless, last month the company said that it is “evaluating all courses of action to preserve our financial strength” due to the global pandemic.
Since the closure of all stores the majority of Neiman’s 14,000 employees have been put on leave. The economic blow comes just as large interest payments are expected for the company’s USD4 Billion debt due April 15th.
Last year Neiman managed to convince creditors to sort its debt by postponing due dates to its monetary obligations, though the deal added further interest payments to the amount. As this solution did not target the company’s battling business position, it has since gotten worse.