UPDATE: March, 19, 2019: A Texas judge on Tuesday dismissed Marble Ridge's lawsuit against Neiman Marcus, concluding that the lawsuit lacked "subject matter jurisdiction," according to court documents. In response, a Marble Ridge spokesperson said the ruling does not address "the key issues, which are the inappropriate transfer by Neiman Marcus of the MyTheresa assets; the questionable financial condition of Neiman; and its implication for stakeholders." In a statement, Neiman Marcus said it's looking forward to working with debtholders. "These holders chose to engage in constructive discussions with the company rather than engage in a campaign of false and misleading statements designed to harm the company and disrupt those negotiations."
- Marble Ridge Capital, a Neiman Marcus creditor, on Friday sent a letter to the board of directors of the luxury department store retailer in response to a recently proposed financial agreement with creditors to extend its debt maturities by three years. The company argues the proposed agreement "merely seeks to pressure creditors to forgive the misconduct of the Board and turn a blind-eye to the Sponsors' self-enrichment scheme," and added that it doesn't believe the proposal will gain approval.
- Marble Ridge also criticized Neiman Marcus for a request within the proposal for creditors to waive litigation claims against it. It reiterated its stance that "100% of the valuable MyTheresa assets must be returned to the Company…" and said it plans to speak with other bondholders "in the coming days" about its concerns, taking "all necessary actions to protect our rights."
- A Neiman Marcus spokesperson told Retail Dive in a statement: "As we have said before, this is a small holder of participation interests who was invited to join creditor groups holding over $2 billion of claims across the Company’s entire capital structure. Those creditors have engaged in productive discussions resulting in an agreement in principle. This small holder has declined multiple invitations to engage in negotiations and now appears disappointed that those negotiations are bearing fruit. We stand by our prior comments. We look forward to our day in court.”
After months of back and forth, MyTheresa is on the table as collateral for some of Neiman Marcus' nearly $5 billion debt load. That's cooled concerns from majority lenders, but Marble Ridge still isn't happy. The company has ongoing litigation against the luxury department store retailer regarding the transfer of the e-commerce unit last year.
MyTheresa, viewed as one of Neiman's most valuable assets and described by the company as the "highest quality business model in online luxury," appears to have been the linchpin in bringing majority noteholders and term lenders to the bargaining table to give Neiman Marcus more time to make good on its larger "Project Rolex" turnaround plan that aims to drive $5 billion in total sales and $700 million in adjusted EBITDA within five years.
Until last week, creditors haven't been on the same page with the terms of that plan. In December, Marble Ridge filed a lawsuit against Neiman Marcus charging the department store retailer with "among other wrongdoings, the fraudulent transfer of assets totaling approximately $1 billion of value for no consideration." Neiman Marcus followed up with a countersuit for damages accusing the company of making false statements about its financial position. Tension escalated further in January when Marble Ridge filed an anti-SLAPP (Strategic Lawsuit Against Public Participation) motion to dismiss Neiman Marcus' counterclaims for the alleged damages.
In its most recent letter to Neiman Marcus, Marble Ridge referred to the litigation, saying: "Your continued attempts to co-opt certain creditors will not insulate yourselves from liability and does nothing to change the wrongdoing charged in the Amended Petition filed against Neiman Marcus and the related entities in the District Court of Dallas County, Texas, that the Neiman Defendants have engaged in gross misconduct including an improper transfer of assets of approximately $1 billion of value, intentionally stripping these assets away from creditors for no consideration."
A hearing on the issue that was initially slated for Feb. 21 was canceled. Future hearings on the matter are scheduled for March 7 and March 21.
Correction: A previous version of this article misstated Marble Ridge Capital's Neiman Marcus debt holdings.