Neiman Marcus Nears End Of Bankruptcy

Neiman Marcus could exit Chapter 11 in time for holiday shopping.

According to the The Dallas Morning News, the luxury retailer is closer to exiting bankruptcy and is on schedule to have an approved business plan this fall and to emerge from Chapter 11 before Christmas.

In the last 24 hours, disputes over executive retention pay and an asset transfer have been settled.

The high-stakes negotiations reached a tentative agreement on Thursday (July 30) over Neiman Marcus’ business plan and a settlement in the dispute over the transfer of its Munich-based MyTheresa business, the newspaper reported.

U.S. Bankruptcy Judge David Jones is expected to sign off on the plan next week. As part of the deal, he approved raises for CEO Geoffroy van Raemdonck and as many as 246 key employees. 

The court’s trustee, who serves as a watchdog, opposed the “pay to stay” compensation, but the trustee was overruled by Jones. As a result of the ruling, the additional pay for the top executives is capped at $9.95 million, including $6 million for van Raemdonck. In a separate ruling, $8.7 million in additional pay was approved for 239 employees, including vice presidents and other key employees.

“The parties that will bear the cost of this support it,” Jones wrote, adding that he approved the salaries “to maximize the opportunity for success and retain the best and the brightest in an environment that we don’t understand one day to the next.” 

While Neiman Marcus’ creditors did not oppose the pay increases, Jones put a decision on hold as he sought more context about what he said is a complicated case, the News reported.

Mark Weinsten, chief restructuring officer of Neiman Marcus Group, argued that the extra pay was justified and made the case that the financials support it.

The transfer of MyTheresa to Neiman Marcus’ former shareholders, Ares Management and the Canada Pension Plan Investment Board, was also resolved. Under the terms of the restructuring, shares of MyTheresa will be returned to the pool of assets that will be used to help pay creditors. While the total value of the settlement was kept under wraps, it includes 140 million shares of MyTheresa and $10 million in cash. 

In a statement, Neiman Marcus said it is pleased that a global settlement was reached.

“The settlement resulted in the approval of the disclosure statement and adds significant certainty to the restructuring process, and we continue to target early fall 2020 for emergence from bankruptcy,” said the Dallas-based retailer.