UPDATE: December 17, 2018: Neiman Marcus Group filed a countersuit Friday against Marble Ridge for alleged damages resulting from "a series of false public statements accusing the company of being in default under its agreements with its debtholders." The company reaffirmed the stability of its financial position, adding that it just completed its fifth consecutive quarter of positive sales, and that the company has $620 million in liquidity and time to refinance its debt.
Marble Ridge Capital, one of several Neiman Marcus debtholders, on Monday filed a lawsuit charging the department store retailer with "among other wrongdoings, the fraudulent transfer of assets totaling approximately $1 billion of value for no consideration." The allegations are related to Neiman's move this September to shift its MyTheresa e-commerce business to a corporate entity held by its private equity owners. The business is seen as one of its most valuable remaining assets.
Marble Ridge is seeking $1 billion in recompense for its claims. It also alleges that MyTheresa was moved to benefit Neiman's private equity owners Ares and Canada Pension plan Investment Board. In its lawsuit, the company further argues that Neiman won't be able to pay back its debt due in 2020: "A default under the revolver will set off a cascade of events leading to bankruptcy."
Neiman Marcus snapped back at the lawsuit in a statement emailed to Retail Dive on Monday: “For the last three months, Marble Ridge has made numerous false statements in the press, and has repeated them in this complaint. The company will defend itself vigorously against these false allegations. Neiman Marcus is not and has never been in default, and is in full compliance with the terms of its debt agreements."
Over the last few months, Neiman Marcus has butted heads with bondholders and lenders unhappy with its financial restructuring plans. While Marble Ridge has been the most vocal about its displeasure with the company's handling of its maturing debt, refinancing talks this fall ultimately fell through, according to a company document filed with the SEC last week.
During a conference call regarding its fiscal first-quarter results on Dec. 6, CEO Geoffroy van Raemdonck said the company has "ample runway to address our debt," adding that he's certain a "multi-beneficial solution can be reached."
Meanwhile, Marble Ridge is pushing a much bleaker narrative, and it may be because they've been excluded from talks so far, Jack Tracy, global head of legal analytics at Debtwire, told Retail Dive in an interview.
"The fact that Marble Ridge has been writing letters and touting this complaint for a good week before it actually filed it says to me that they have been sort of shut out of the process and are not interested, at least currently, do not appear interested in working with the established groups," Tracy said, adding that their strategy may be different than a party that is solely a bondholder or solely a lender.
"Everyone wants a piece of MyTheresa," Tracy said, adding that other creditors may be prudent to sit on the sidelines and see how the lawsuit plays out.
For years, Neiman Marcus has struggled under a more than $4.5 billion debt load, thanks in part to two leveraged buyouts from private equity owners. That, among other things, helped push the company onto Retail Dive's bankruptcy watch list. But not all analysts are fearful of an imminent bankruptcy.
Debtwire Analyst Philip Emma told Retail Dive in an interview last week that while Neiman still has a "significant amount of liquidity" the maturity timeline for their loan will compress soon. "Their term loan matures on Oct. 25, 2020, which means it goes current pay on their financial statement in October of 2019," he noted.
As tensions have risen, Neiman Marcus has defended its financial situation, pointing to the fact that revenue in the first quarter rose 2.8% year over year to reach $1.1 billion and that the company marked its fifth consecutive quarter of comparable revenue rises.
Correction: A previous version of this article misstated Marble Ridge Capital's Neiman Marcus debt holdings. Retail Dive regrets the error.