Neiman Marcus Seeking California Chapter 11 Bankruptcy amid Virus Pandemic
The coronavirus pandemic has reportedly pushed one of the largest retail stores in the US, Neiman Marcus, to the point of seeking bankruptcy. Although it is just one among the market giants, it doesn’t seem to be the last to be going that route. Reports indicate that the retail store may be seeking bankruptcy protection sooner than expected after being saddled with debt for the better part of the year.
The company is currently grappling with debt over 4.3 billion from different lenders, having temporarily halted its operations in March to hold talks with its creditors. As such, it is considering the drastic step of closing down some of its stores in California to keep afloat amid the worsening crisis.
The Chapter 11 California bankruptcy codes, in this case, would allow the company to remain in business while taking measures to limit or close its operations in their under-operating stores. With the bankruptcy protection in place, the company would be in an excellent position to handle its debts while at the same time reorganizing its assets and business affairs to meet the current conditions.
The pandemic has so far impacted not only the retail stores but also wholesale outlets including Walmart, target, and Cusco. Among these, the clothing stores are the most affected by the stay at home orders, with the accessory sales falling by more than 50%.
Though it is not clear at the moment, Neiman Marcus is already on the verge of bankruptcy, with the announcement being expected sometime before the close of the week. Under Chapter 11, California bankruptcy laws, the company would have to look for ways to hold private discussions with its creditors as well as their suppliers to agree before the bankruptcy proceedings began.
This way, there will be sufficient time to rework unsustainable finances and rearrange the affairs of the workers that the company has in its branches.
While the company rework its finances and attempt to cover the debts accrued within the first quarter of the year, the Chapter 11 Bankruptcy would come in handy in keeping the creditors at bay, thereby securing the company’s assets.