Dallas-based luxury retailer Neiman Marcus filed for Chapter 11 bankruptcy Thursday morning and said most retail stores will remain closed through the end of the month.
The company, which was struggling financially prior to the pandemic, has only been in a worse spot since the emergence of COVID-19 when they were forced to close all 43 stores on March 18.
“Like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business,” said CEO Geoffroy van Raemdonck in a statement on the company's website.
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A bondholder said the retailer failed to make a $5.7 million interest payment that was due in April, according to a report by the Dallas Morning News, possibly setting the stage for the filing.
Neiman Marcus said Thursday their stores will stay closed until at least May 31 and that the majority of their furloughed workforce, roughly 14,000 employees, are expected to remain out of work that long but that the duration may be extended or shortened based on COVID-19 developments.
"It's such an institution in Dallas," Curator of Photos for the DeGolyer Library at SMU Anne Peterson said.
Peterson said Neiman Marcus helped put Dallas on the culture and fashion map.
"There really wasn't a ready-to-wear business," Peterson said. "They kind of created this new kind of shopping, because women who had money had clothes made, and women who didn't have money made their own clothes."
In their statement Thursday, Neiman Marcus said $675 million in financing has been secured from creditors to fund operations through bankruptcy this fall. Neiman's creditors also committed to a financing package of $750 million to refinance that financing and provide additional liquidity once they exit bankruptcy, which they plan to do this fall.
Once the company emerges from bankruptcy, the creditors will become the majority owners in the longtime luxury brand.
"The binding agreement from our creditors gives us additional liquidity to operate the business during the pandemic and the financial flexibility to accelerate our transformation. We will emerge a far stronger company," van Raemdonck said. "In a world that is changing, we are uniquely positioned to give our brand partners access to our loyal luxury customers like no other company. We will deliver that through the strength of our associate relationships and digital solutions."
The company said they will reopen stores as it is safe to do so based on the status of the pandemic and that "the Chapter 11 process will not impact the timing of store re-openings."
Meanwhile, the company's digital storefronts remain open and are serving customers on their Neiman Marcus and Bergdorf Goodman websites and apps.
The company said a total of 10 stores nationwide are now open for curbside pickup – all Texas Neiman Marcus stores, as well as locations in Tampa, Las Vegas and Tysons Corner stores. On May 4, the Atlanta and NorthPark Neiman Marcus stores became available to customers by private appointment.
Neiman Marcus is the second major retailer to file for bankruptcy in the last week. Struggling fashion brand J. Crew filed for bankruptcy protection earlier this week. More retail bankruptcies are possible, with Plano-based J.C. Penney also facing financial problems. Gap Inc. has also warned it is running out of cash and is looking for an infusion.