A Dallas judge has dismissed a Marble Ridge Capital lawsuit against Neiman Marcus Group that had alleged “the fraudulent transfer of the MyTheresa assets to Ares Management and the Canada Pension Plan Investment Board for no consideration.”
MyTheresa is the Munich-based luxury web site owned by the Neiman Marcus Group, which is owned by Ares and CPPIB.
Marble Ridge filed its lawsuit last December, complaining that the MyTheresa assets were being placed beyond the reach of the company’s creditors in order to hinder and delay creditor recovery.
Neiman’s quickly followed with counterclaims against Marble Ridge seeking damages resulting from what Neiman’s termed “a series of false statements” about the company that Marble Ridge made publicly, among them that the retailer was in default under its agreements with its debtholders. Neiman’s also claimed that Marble Ridge, through its statements, wanted to harm the retailer.
Neiman’s sought over $1 million in monetary damages on the claims, but Tuesday’s dismissal did not involve any financial settlement.
In her decision handed down Tuesday, Judge Tonya Parker of the 116th Civil District Court of Dallas County, wrote: “Having considered the plea, the evidence and arguments of counsel, the court concludes that the plea should be granted and that plaintiff’s first amended petition should be dismissed for lack of subject matter jurisdiction…All claims asserted against Neiman Marcus by plaintiffs in the first amended petition…are hereby dismissed with prejudice to refiling of the same.” With prejudice means that the case is dismissed permanently and can not be brought back to court.
In a statement Tuesday, Neiman Marcus said, “From the beginning, we have said that Marble Ridge’s lawsuit lacked merit. We are pleased that the court has fully vindicated our position and dismissed all of Marble Ridge’s claims with prejudice. Neiman Marcus Group looks forward to continuing to work with holders of more than $2 billion of its debt to advance its agreement in principle. These holders chose to engage in constructive discussions with the company rather than engage in a campaign of false and misleading statements designed to harm the company and disrupt those negotiations.”
A spokesperson from Marble Ridge said, “While we had hoped the court would rule differently on our standing to bring the fraudulent conveyance claims, this particular ruling does not address the key issues, which are the inappropriate transfer by Neiman Marcus of the MyTheresa assets; the questionable financial condition of Neiman; and its implication for stakeholders.”
Earlier this month, NMG reached a preliminary agreement with its lenders of $2 billion in debt on an a three-year extension and amendment of its debt maturities. The agreement, subject to final approval, enhances Neiman’s capital structure and gives the luxury retailer some much-needed breathing room to sustain its operations, which have been hampered by its huge debt load. The $5 billion NMG has $4.6 billion in debt, which includes a $2.8 billion term loan due in October 2020, and two sets of bonds and an asset-backed loan due in 2021.
Neiman’s has been paying hundreds of millions annually to cover the interest costs on its debt, including $307 million during the most recent fiscal year, ended July 28.