It’s crunch time for the Neiman Marcus Group.

On April 15, $5.6 million in interest is due on bonds and $115 million in interest is due April 25 on another set of bonds, raising the specter of a potential bankruptcy.

“They’ve notified lenders that they will not be paying the interest,” said one source familiar with the Neiman’s situation. “I know Neiman’s is actively working on a debtor-in-possession loan for a bankruptcy soon.”

Sources have expected Neiman’s to file for bankruptcy this month, but the company has said it has been working on different restructuring alternatives. The Dallas-based luxury retailer is not commenting specifically on the possibility of a bankruptcy or other restructuring alternatives, or on the interest payments. It is believed that the owners of NMG intend for the company to stay in business.

The company could try to sell off parts of the business, such as the Mytheresa luxury web site based in Germany, or Bergdorf Goodman. Richard Baker, executive chairman of the Hudson’s Bay Co. which operates Saks Fifth Avenue, Saks Off 5th and Hudson’s Bay in Canada, has long been interested in purchasing NMG to create a luxury powerhouse. It’s unclear whether he would wait for a bankruptcy before swooping in.

A Chapter 11 restructuring would wipe out debt and equity, create new ownership, enable the company to hasten some closings of weaker performing stores, and allow it to keep operating. Generally, Neiman Marcus stores are productive, generating high sales per square foot. Under the leadership of chief executive officer Geoffroy van Raemdonck, NMG has been transforming into a “luxury platform” to be more experiential with new types of services and products, and to no longer be defined as just a department store.

But the company has been weighed down by its $4.6 billion in long-term debt leaving insufficient capital to invest in stores and other areas. The coronavirus pandemic has compounded problems at the company, forcing store closures and evaporating revenues.

As previously reported, Neiman’s has been in talks with term-loan lenders on obtaining debtor-in-possession financing for a potential bankruptcy. The company pays interest on bonds semiannually, and bank interest quarterly.

Last month, the Dallas-based luxury retailer said it had begun evaluating “all courses of action to preserve our financial strength to continue serving customers and associates.” More recently, the company said it furloughed a significant portion of its workforce, but leaving most of its 13,700 employees still working, either full or part-time. All of the retailer’s stores are temporarily closed.

It is believed that the $5.6 million in interest due April 15 is tied to $138 million in bonds due 2021 not exchanged as part of a financing that pushed back the due date on the rest of the debt to 2024. The $115 million in interest due later in April stems from the 2024 bonds.

NMG has been paying around $300 million in annual interest expense, dragging down its profitability and resulting in losses. The luxury retailer generates $5 billion in annual volume through its 43 Neiman’s stores, two Bergdorf Goodman stores, neimanmarcus.com, bergdorfgoodman.com, Mytheresa, the Horchow direct-to-consumer business and Last Call outlets.

Neiman Marcus Group is owned by Ares Management LLC and the Canada Pension Plan Investment Board, which together bought the business for $6 billion in 2013.

Even before the coronavirus outbreak, there was speculation that Neiman’s could be a bankruptcy candidate. The retailer did show some improved selling trends last year, but then stopped publicly reporting quarterly results.

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