A Texas judge has denied a motion by Marble Ridge Capital to dismiss counterclaims by Neiman Marcus Group against the firm.
In early December, Marble Ridge, a three-year-old firm that invests in distressed debt and one of Neiman’s creditors, filed a lawsuit against Neiman’s in the District Court of Dallas County, Texas, alleging “the fraudulent transfer of the MyTheresa assets to Ares Management and the Canada Pension Plan Investment Board for no consideration.”
A few days later, Neiman’s filed counterclaims against Marble Ridge Capital for damages resulting from what the retailer terms “a series of false statements that Marble Ridge has made publicly about the company.” Neiman’s alleged that Marble Ridge falsely accused the company of being in default under its agreements with debt holders and that the firm made the statements for improper purposes, including to harm the retailer.
NMG in a statement Wednesday said, “We are pleased the court denied Marble Ridge’s motion to dismiss in its entirety. As alleged in our counterclaims, Marble Ridge recklessly made false statements regarding the company’s compliance with its debt documents with the intent of damaging the company. The court has already fully vindicated Neiman Marcus Group’s position that Marble Ridge’s claims against the company lacked merit and dismissed all of Marble Ridge’s claims with prejudice. We look forward to advancing our defamation and business disparagement claims against Marble Ridge.”
Marble Ridge also issued a statement Wednesday, indicating, “We are disappointed by the judge’s ruling on this procedural issue and intend to immediately appeal the judge’s ruling. Regardless of the judge’s ruling on this procedural issue, it does nothing to change Marble Ridge’s views about Neiman’s questionable financial condition; the inappropriateness of the company’s transfer of the MyTheresa asset to its out-of-money equity sponsors; the potential impairment of such transfer to all of Neiman’s other stakeholders, and the ‘devil’s bargain’ contained in the company’s restructuring proposal that rewards the company’s sponsors at the expense of the company’s other stakeholders while continuing to leave the Company exposed to significant financial risk.”
Last month, NMG, which has $4.6 billion in debt that begins to come due in 2020, said it reached a transaction support agreement with lenders holding 57 percent of its term loan and 61 percent of its unsecured notes. Under terms of the deal, the term loan maturity would be pushed back to October 2023 and the unsecured notes could come due in April 2024.
The term loan holders’ package includes a $550 million pay down at par and collateral that includes a first lien or first priority interest in about $1.8 billion of the retailer’s unencumbered real estate. And noteholders would get an exchange offer, which includes $250 million of 10 percent nonvoting preferred equity of a U.S. holding company tied to NMG Germany, holding the Mytheresa business, and other adjustments.
Neiman’s said the exchange offer would commence this month and the transaction is projected to close in late May.