With all of its stores closed, burdened by $4.8 billion in loans, Neiman Marcus is moving toward seeking bankruptcy protection. The filing could come this week, Reuters reports. It would be the first major department store company to reach that point since the pandemic hit the US, and Neiman Marcus has struggled to head off bankruptcy for years. The company restructured some of its debts last year to delay repayment, but that added interest costs. Payments due last week, totaling millions, were not made, and the window for avoiding default on one of those debts was just a few days. Neiman Marcus, which has furloughed many of its 14,000 employees, is working on a loan to keep it going during the bankruptcy process.
A Standard & Poor’s note last week said, "We believe the company’s prospects for a turnaround are increasingly low." A pandemic is a bad time to have a lot of debt, Walter Loeb wrote Friday in Forbes. As cash flow dries up, other department store chains could disappear. JCPenney, with debt around $4.2 billion, said it wasn't going to make an interest payment last week. Retailers including Macy's, which wants 120 days, are negotiating to delay due dates for payments. Walmart, Target, and Costco are among the companies still paying vendors, Loeb writes. (Read more Neiman Marcus stories.)