Neiman Marcus may face additional litigation from its lenders, according to multiple reports this week. A group of term loan lenders aims to remove the administrative agent for the loan, Credit Suisse, due to the bank's refusal to pursue legal action over Neiman Marcus' transfer of its MyTheresa e-commerce unit, Debtwire first reported, citing anonymous sources.
A lawsuit could be filed within the next 30 days, anonymous sources told Women's Wear Daily. About 20 financial institutions, including Aurelius Capital, Texas Pacific Group and Owl Creek Capital, sent a letter to Credit Suisse Friday demanding the bank's resignation as administer of the term loan, sources told both publications.
In a statement regarding the news reports, Neiman Marcus told Retail Dive it had not seen the letter. "It apparently contains allegations similar to those made by Marble Ridge. We have made our position clear with respect to those allegations. This distribution of MyTheresa was expressly permitted by the Company’s credit documents. MyTheresa was already an unrestricted, non-guarantor subsidiary not part of our lenders’ collateral and it will remain outside of the collateral. The Company is not insolvent; it always has and will continue to meet its financial obligations."
The proposed new lawsuit, which may be filed jointly by several lenders, appears to echo concerns raised in a lawsuit filed earlier this month by debtholder Marble Ridge Capital.
That lawsuit charges Neiman Marcus 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 also argues that Neiman Marcus won't be able to pay down its debt as it matures.
In the letter sent to Credit Suisse, segments of which were communicated to WWD, according to its report, the lenders asserted that the Marble Ridge litigation will affect all of Neiman's lenders and that action was needed to protect the interests of all lenders.
Neiman Marcus last week slapped Marble Ridge with a countersuit for alleged damages resulting from "a series of false public statements accusing the company of being in default under its agreements with its debtholders." In its suit, 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. Earlier this month, Neiman Marcus reported that total revenue for its first quarter reached $1.1 billion, a 2.8% increase in comparable revenue year over year.
Meanwhile, on and off talks starting in October between Neiman Marcus and its creditors came to a halt at the start of December when the three groups of parties involved could not come to an agreement. During a conference call Dec. 6, CEO Geoffrey van Raemdonck said the company has "ample runway to address our debt," adding that he's certain a "multi-beneficial solution can be reached."
In its statement, Neiman Marcus reiterated those thoughts, adding, "We view these negotiations as an ongoing process that will likely take time."