Popular retailer Neiman Marcus is reportedly preparing to file for bankruptcy weeks after furloughing thousands of employees in the wake of the COVID-19 pandemic.
Neiman Marcus Group is preparing to seek bankruptcy protection as soon as this week, which would make the brand one of the first major department stores to buckle under the economic ruin from the virus, sources familiar with the company told Reuters.
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The Dallas-based company has been left with few options after the pandemic forced it to temporarily close its 43 locations, roughly two dozen Last Call stores and its two Bergdorf Goodman stores in New York. Burdened by debt and the quick downturn as a result of the outbreak, Neiman Marcus recently furloughed most of its 14,000 employees.
The company is now in the final stages of negotiating a loan with its creditors totaling hundreds of millions of dollars, which would sustain some of its operations during bankruptcy proceedings, according to the Reuters report.
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Macy’s, Gap and Kohl’s have all had to close their doors and furlough workers since last month, when the country began to experience a spike in COVID-19 cases and deaths. One other mall retailer, JC Penney, may soon join Neiman Marcus in seeking bankruptcy protection, according to Reuters.
For Neiman Marcus, the financial woes began well before March. In recent years, the company had tried to delay bankruptcy protection and push out due dates for its financial obligations after a restructuring last year.
A trustee for some of the company’s bondholders sued Neiman Marcus last year, claiming the firm and its owners robbed investors of the value of its luxury e-commerce site Mytheresa by moving the business beyond the reach of creditors in a corporate reshuffling. Neiman Marcus maintains its actions were proper.
“In light of the significant headwinds stemming from the coronavirus pandemic and our expectation for a U.S. recession this year, we believe the company’s prospects for a turnaround are increasingly low,” Standard & Poor’s analysts wrote in a note last week.