Geoffroy van Raemdonck will stay on as chief executive officer at a reorganized, post-bankrupt Neiman Marcus Group.
He’ll also continue as a member of the company’s board.
That’s according to a lengthy document filed in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, where Neiman’s bankruptcy case is being heard.
The document is a supplement to the plan of reorganization, which has not yet been approved. If the plan is confirmed by bankruptcy court, the supplemental document gets approved, too, and van Raemdonck continues to lead the Dallas-based luxury retailer.
The court has set Sept. 4 for the confirmation hearing, meaning Neiman’s would emerge from Chapter 11 in early fall.
“Geoffroy van Raemdonck is expected to continue in his current role as ceo and to serve as a director on the new board,” the documents state.
Van Raemdonck, who has also held the title of chairman of the board of managers since April 2020, has been ceo and a member of NMG’s board of directors since February 2018.
Before Neiman’s, van Raemdonck served as group president for Europe, Middle East and Africa and Global Travel Retail at Ralph Lauren. Before that, he was ceo at St. John Knits International; president of the Southern Europe region for Louis Vuitton, and an executive at L Brands. He spent the first eight years of his career with Boston Consulting Group, which has continued to assist NMG in its restructuring.
Eyebrows were raised when van Raemdonck succeeded Karen Katz as ceo of NMG two-and-a-half years ago because he never ran a major retail chain before, and wasn’t well known in the U.S. But he came to the business with fresh ideas and developed a “transformation” plan, which apparently the lenders, who would become the new owners through the reorganization, approve of. The plan wipes out $4 billion of the luxury retailer’s debt and has brought in a new financing package to keep the company operating.
On May 7, when NMG filed for Chapter 11, van Raemdonck told WWD that he would, along with the rest of the existing management, remain with the company through the bankruptcy proceedings, and that based on conversations with creditors, he was confident they wanted to sustain the Neiman’s “transformation” strategy he had been championing for two years.
But he didn’t address his prospects for staying as ceo after the bankruptcy, leaving some doubt about his future. With any company that goes bankrupt, long-term prospects become questionable, as does the fate of existing management and its strategies, given the arrival of new owners and financial objectives.
Van Raemdonck has on various occasions contended that the Neiman Marcus Group would not have filed for bankruptcy if the coronavirus pandemic had never happened, and that it had been generating enough cash to service the interest on the company’s debt, though months before the outbreak of COVID-19, there were rumblings that Neiman’s was headed towards bankruptcy anyway as principal payments on loans loomed.
His “transformation” strategy is geared to modernize the Neiman Marcus Group into a “luxury customer platform” with new types of services and products — fashion and nonfashion — so that NMG would no longer be considered primarily a department store business with the Neiman’s chain and the two Bergdorf Goodman stores. The strategy also seeks to sharpen the focus on full-price selling and personalization, and has been providing sales associates with technology tools so they can sell better online and offline.
Through its bankruptcy, Neiman’s has been downsizing, and has identified several stores to close, including the Manhattan flagship in Hudson Yards. About 10 to 12 stores are seen closing, though the actual number has not been confirmed.
According to the court documents, the new board will initially consist of seven directors, including the ceo; three directors designated by Pacific Investment Management Co.; one director designated by Davidson Kempner Capital Management LP; one director designated by Sixth Street Partners, and one independent director designated by holders of new equity (other than PIMCO).
The term loan lender group has engaged a recruiting firm to identify directors to fill remaining board seats, the documents indicate.
Meanwhile, a group of former senior executives from NMG are fighting to save their retirement plans, which stand to be wiped out by the court proceedings, sources told WWD.
The compensation in question include two nonqualified retirement plans known as supplemental executive retirement plans (SERP) according to a Neiman Marcus spokeswoman. She said the SERPS were fully contributed to by the company. “No employee put their own money in,” said the spokeswoman. Neiman’s pension plan and 401(k) are not impacted by the bankruptcy, she added.
However, Neiman’s through the bankruptcy is seeking to wipe out a third nonqualified employee deferred compensation retirement plan, where high-paid employees contributed a portion of their pay to the plan on a pre-tax basis. At least one former Neiman’s executives who participated in the deferred compensation retirement plan is on the brink of pursuing legal action to attempt a recovery of his money.
“This has been handled very poorly by the company, especially the deferred employee compensation plan. That’s what I’m fighting for. It’s an injustice. The funding being held is the employees’ money – not the company’s money,” stated Tom Lind, a former Neiman Marcus senior vice president, who in his last position at the store ran the real estate and properties functions. He said he retained a lawyer to help him rescue his money. It wouldn’t necessarily be a class action lawsuit, Lind said, but others who participated in deferred compensation plan could support his legal action.
“The company has still not sent out a formal announcement to employees for rejecting the retiree plans. It’s wrong,” said Lind. The company is handling this badly.” He believes the company buried the decision to reject the retirement plans deep in recent court documents.
According to Lind, there’s about a dozen or so former Neiman’s executives that participated in the deferred compensation plan who would lose between $100,000 to $300,000 each, depending on how long they participated in the plan.
There’s 140 or so former Neiman’s executives who were counting on getting monthly payments from the company-funded SERPs which could have amounted to between $1 million to $2 million per person over the course of their lives depending on their age and how long they live, according to Lind.
According to another source familiar with the situation, “Lots of former executives are pissed off because, while they are losing fortunes, the new executive team members are enriching themselves.” Neiman’s has set aside millions in bonuses for van Raemdonck and current senior executives, which has come under the scrutiny of the U.S. trustee overseeing the bankruptcy case, questioning whether the bonuses are rewards based on performance metrics, or simply for staying with the company.
It should be noted that in bankruptcies, it’s not uncommon for companies to wipe out nonqualified retirement plans. Nonqualified retirement plans do not fall under the guidelines and protections of the Employee Retirement Income Security Act and the money in these plans are not secure from creditors in a bankruptcy.