Neiman Marcus Group seems to be proceeding with caution.
On Tuesday, an attorney for the retailer told the Texas bankruptcy judge overseeing the case that it will evaluate how to reopen its stores in the coming weeks.
“We are anxious to open more stores, but are looking to do that in a methodical way, and at the right time,” Matthew Fagen of Kirkland & Ellis LLP, which represents Neiman’s in the proceedings, told U.S. Bankruptcy Judge David Jones. “Both, for the business, and also in respect of the environment writ large, that we’re dealing with today and this week.”
Fagen’s comments appeared to be an oblique reference to the ongoing protests around the country, sparked by the police killing of George Floyd in Minneapolis and the enduring state of violence against black people by police when detained for nonviolent offenses, or even held at routine traffic stops.
The last several days of protests, which have led to often brutal crackdowns by police wielding pepper spray, batons and, in some cases, their vehicles as weapons, have led retail stores to close their doors again after briefly reopening them during the coronavirus pandemic.
Fagen said so far, the retailer has had “higher-than-projected sales” and that as a result, its cash on hand exceeds its budgeted amount at this point by more than $100 million. He said the company is using the cash to buy inventory and open more stores that had been closed because of the coronavirus pandemic, which is also still ongoing.
So far, the retailer has reopened 12 Neiman Marcus and seven Last Call stores for curbside appointments and for appointment shopping. In a hearing last week, its attorney Chad Husnick, also of Kirkland & Ellis, had pointed to “substantial uncertainty as to when the debtor’s remaining stores will reopen and commence operations at pre-COVID-19 levels.”
The retailer initially anticipated opening its stores around July 18, but now its advisers say stores will open at different paces around the country, some after that date.
In terms of funding, Neiman’s has received $275 million, a portion of its debtor-in-possession financing, and is expecting to receive another $250 million in DIP financing after a final hearing on its DIP motion, which is scheduled for June 10. Fagen said Tuesday that the company planned to use the time until then to “increase the amount of consensus we have in the case.”
The retailer entered its Chapter 11 proceedings last month with a plan to restructure that it said was backed by lenders of most of its loans.
Last week, Neiman’s advisers told the court that its restructuring support agreement has the backing of 99 percent of the first lien term loans, 100 percent of the second lien term loans, and 78 percent of the debentures, among others.