NEW YORK - Neiman Marcus has filed for Chapter 11 bankruptcy protection, sounding an ominous note for department stores during the coronavirus pandemic.
The debt-laden Dallas-based company had to temporarily shut all 43 of its Neiman Marcus locations and its two Bergdorf Goodman stores in New York.
According to a press release from the company, the move will allow Neiman Marcus to substantially reduce its debt load and interest payments while “supporting continued operations during the COVID-19 pandemic and beyond.”
“Prior to COVID-19, Neiman Marcus Group was making solid progress on our journey to long-term profitable and sustainable growth,” Geoffroy van Raemdonck, Neiman Marcus Chairman and CEO, said in a press release. “However, like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business.”
The press release notes that the company’s creditors have committed to fulfill $675 million in DIP (debtor-in-possession) financing during the proceedings, and that creditors have also committed to fulfilling a $750 million exit financing package “that would fully refinance the DIP financing and provide additional liquidity for the business.”
The retail sector has struggled immensely amid the COVID-19 pandemic, with social distancing guidelines and lockdown orders barring many non-essential stores from operating across the country.
The move comes days after reports that the Lord and Taylor chain was expected to liquidate upon reopening.
Clothing company J Crew also has announced it was entering bankruptcy protection.
This is a breaking story and will be updated. The Assoicated Press contributed to this report.