Neiman Marcus Could Be The First Department Store To File Bankruptcy Amid The Coronavirus Pandemic

Neiman Marcus may become the first department store to file for bankruptcy amid the coronavirus pandemic.

According to sources for Reuters, the retailer is preparing to file as soon as this week, after temporarily closing its stores. Neiman Marcus closed 43 of its namesake locations and about two dozen Last Call stores and two Bergdorf Goodman locations.

The company also furloughed a portion of its 14,000 employees.

At the time the company announced the store closures, it said in a statement, “There is nothing we care about more than the safety and well-being of our customers and our associates. We have a rich history of being responsible members of the communities we serve and must do our part to help stop the spread of COVID-19.”

Neiman Marcus is reportedly in the last stages of negotiating loan terms with its creditors for hundreds of millions of dollars. The company also skipped a debt payment last week, which would only give it a few days to avoid default, according to the news outlet.

Neiman Marcus’ loan amount stands about $4.8 billion, according to Standard & Poor’s credit rating report. Some of the debt is from its $6 billion leveraged buyout that occurred in 2013, by its owners, Ares Management Corp. and Canada Pension Plan Investment Board.

In its report, Standard & Poor’s said, "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. Neiman Marcus completed a restructuring, including a second-lien note offering and a debt exchange that we viewed as distressed, last June but did not reduce its nominal debt level. We continue to view its capital structure as unsustainable."