Neiman Marcus has received court approval for its plan to reorganize in Chapter 11.
The luxury department store chain, which filed for bankruptcy in May, expects to emerge from the court process by the end of September, according to a press release.
The court-approved plan would eliminate $4 billion in debt and $200 million in interest expense while leaving no near-term maturities, Neiman said in a press release.
A judge has approved the high-end retailer’s debt-for-equity swap, which hands ownership of the department store chain to creditors in exchange for eliminating the majority of its borrowings.
The move clears the way for Neiman Marcus’ emergence from Chapter 11 proceedings, with a “substantially reduced” debt load and “significant” new funding in a strengthened capital structure.
As part of the plan, the company expects to slash more than $4 billion of nearly $5.5 billion in existing debt and more than $200 million of interest expenses, with no near-term maturities.
It added that certain institutional investors will fund a $750 million exit financing package that would fully refinance its debtor-in-possession loan and provide additional liquidity for its business.
Once all conditions have been finalised, as well as received full support from creditors and new equity shareholders, Neiman Marcus plans to exit bankruptcy by Sept. 30.
In the first week of May, Neiman Marcus filed for bankruptcy as the coronavirus pandemic forced the temporary closures of its namesake stores, as well as Last Call and Bergdorf Goodman outposts across the country.
However, the retailer’s pressures had been years in the making: In a quest for profitability, Neiman Marcus had struggled in the face of digital disruption and reduced foot traffic.
Two years ago, it announced a four-year transformation plan that involved investments in omnichannel and supply chain technology, as well as embracing the growing resale trend through a minority stake in consignment company Fashionphile.
Neiman Marcus is the company’s signature retailer, selling women›s, men›s, and children›s apparel, handbags and accessories, designer jewelry and precious jewels, and home and gift galleries.
Neiman Marcus began operations in Dallas in 1907 and opened its first store outside of Texas in 1971.
