Neiman Marcus Bankruptcy Update: Creditor Pushes For A Deal With Saks Fifth Avenue

A deal between Neiman Marcus and Saks Fifth Avenue could be considered if hedge fund Mudrick Capital Management has its way.

The firm proposed the merger in a letter to Neiman Marcus independent directors, challenging the company’s move to reorganize after filing for bankruptcy last week, Reuters reported. Hudson’s Bay Company (HBC), which is the owner of Saks, is reported to have interest in Neiman Marcus but has not made a formal offer to purchase the retailer.

Mudrick Capital, which holds some of Neiman Marcus’s estimated $5 billion debt load, told directors that better financial recovery is possible for creditors through a sale or merger with HBC than the retailer’s current plans to turn control over to its senior lenders and wipe away about $4 billion in debt, the news outlet said. The lenders are also providing Neiman Marcus with $675 million to help finance the bankruptcy proceedings.

Mudrick’s letter, which was obtained by Reuters, suggested that together, Neiman Marcus and Saks would have a value between $2.8 billion and $4.7 billion, in addition to taking on other cost savings such as closing at least 22 stores in close proximity to each other

Neiman Marcus closed all of its stores in March because of the coronavirus, furloughing the majority of its workforce in the process. Neiman Marcus, which owns namesake stores as well as Bergdorf Goodman and Last Call retail stores, has seen its sales drop significantly during the COVID-19 crisis, causing it to become one of the first retailers to file for Chapter 11 during the pandemic.

HBC was spun into a private company in March by its shareholders and is also feeling the impact of the coronavirus on its brands. Hudson’s Bay closed all of its stores in March due to COVID-19.