Facing nearly $5 billion of debt and dwindling sales during the COVID-19 pandemic, luxury retailer Neiman Marcus may file for bankruptcy.
Brick-and-mortar retail sales have dropped significantly because of stay-at-home orders, which have closed non-essential businesses like clothing stores. Like many businesses who find themselves overwhelmed with debt, Neiman Marcus will likely seek relief from its creditors through Chapter 11 bankruptcy.
Why Is Neiman Marcus Possibly Headed for Bankruptcy?
While the global crisis precipitated its predicament, news of Neiman Marcus’ financial trouble is not new. Private equity firm Ares Management Corp and Canada Pension Plan Investment Board bought out the department store chain in 2013, according to the East Bay Times.
The future of Neiman Marcus is uncertain. Fox Business spoke to a source that reported Saks Fifth Avenue might purchase Neiman Marcus. This would be the fourth time the company attempted to merge with its Dallas-based competitor. A merger and/or buyout could occur as part of the chapter 11 bankruptcy process.
Other options include downsizing by half or liquidating, according to the New York Post. According to Bloomberg, Nieman Marcus may be close to a takeover deal with Pacific Investment Management Co as of the first week of May.
More Stores Are Filing for Bankruptcy
Neiman Marcus is not alone in its financial crisis, the New York Post reports. Other retailers, including Macy’s and Nordstrom Inc., are looking for creative solutions to present difficulties.
Stores that have traditionally anchored shopping malls, like J.C. Penney and Sears, are struggling. In fact, Sears Holdings Corp already filed for bankruptcy protection in 2018. A potential Neiman Marcus bankruptcy may simply be the culmination of the retail downturn that has accompanied a consumer trend to shopping online.
Chapter 11 Bankruptcy Protection
Filing bankruptcy can be a prudent move for businesses in trouble.
Sasser Law Firm has extensive experience helping both businesses and individuals navigate bankruptcy. A bankruptcy filing can provide relief to companies in financial distress by protecting them from difficulties like foreclosures and lawsuits. Evictions can be forestalled if the lease has not expired or been terminated prior to the bankruptcy filing.
Moreover, a debtor may be able to renegotiate existing liabilities and arrange new payment terms. Instead of simply losing the business, companies that undergo Chapter 11 bankruptcy can reorganize and plan for a more sustainable future.
Contact the Bankruptcy Attorneys at Sasser Law Firm Today
At Sasser Law, we know how to help businesses in even the toughest positions. Whether you are facing new difficulties due to forced COVID-19 closures or your business has been struggling for years, our attorneys may be able to help.