Neiman Marcus received final approval from the U.S. Bankruptcy Court to access the next phase of $675 million in new financing to help it reorganize and start reopening stores.
Financing agreements put in place with a majority of lenders had some contested issues, and those were worked out before the hearing Tuesday when Judge David Jones approved the revised terms.
The company will get access to $250 million now and $150 million more through early September. It originally received approval for $275 million when the bankruptcy was filed on May 7.
The funds provide the retailer “with ample liquidity to ensure business continuity as we gradually reopen our stores, invest in fall inventory and fund the expansion of our digital offerings,” said Geoffroy van Raemdonck, CEO of Neiman Marcus.
“We remain on track to emerge from this process in fall 2020,” he said.
Business has been strong in recent weeks, he said. The chain has operated during the coronavirus closings and since with digital stylists and online.
So far, two stores have reopened to customers, NorthPark Center in Dallas and Lenox Square in Atlanta. About 90% of the 43 Neiman Marcus stores are either open by appointment or offering curbside pickup of online and phone orders. Neiman Marcus also owns Bergdorf Goodman in New York. Before its bankruptcy, the company had said that it would close more than 20 Last Call clearance stores this summer.
When the company exits bankruptcy, it will have shed $4 billion of debt from its balance sheet.
As part of the revised financing agreement, Neiman Marcus’ lenders released any claims to the company’s former German subsidiary Mytheresa, which was transferred in 2018 to Neiman Marcus’ shareholders Ares Management and the Canada Pension Plan Investment Board. That transfer of an asset, which was valued at $1 billion at the time, to the retailer’s private equity owners was contested in court by bondholder Marble Ridge.
Also, the agreement is no longer an exclusive one, meaning that a third party, such as the creditors committee, could file an alternative plan to pursue claims against Ares and the Canada pension fund. After a contentious hearing two weeks ago, the judge allowed the creditors committee to investigate the transfer of Mytheresa.
A $6 billion leveraged buyout of Neiman Marcus in 2013 by Ares and the Canada Pension Plan doubled the retailer’s debt and eventually led to its bankruptcy filing.