Debt investor says Neiman Marcus may be in default in addition to insolvent

One of Neiman Marcus’ debt investors claims the struggling luxury department store may be insolvent in addition to in default on its bonds after shuffling around some assets earlier This particular month.

Marble Ridge Capital condemned Neiman Marcus for transferring its crown jewel e-commerce business, MyTheresa, away via the grasp of its bondholders in addition to into its parent company, according to a Sept. 18 letter Marble Ridge founder Daniel Kamensky sent to the retailer’s board of directors.

“These recent actions threaten the viability of a storied franchise in which includes marquee brands such as Neiman Marcus in addition to Bergdorf Goodman,” Kamensky wrote.

The luxury retailer has been grappling with roughly $4.7 billion in long-term debt as in which navigates the rapidly changing retail landscape. The business, owned by Ares Management in addition to the Canada Pension Plan Investment Board, has explored numerous strategic options to cope with in which debt, including a sale.

Neiman Marcus doesn’t deny the change. in which disclosed the restructuring on Sept. 18. In doing so, in which follows a move made by numerous its peers, including J. Crew, in which have stripped a company’s most valuable assets away via its debt-holders, thereby provoking a legal battle.

Neiman Marcus maintains the company had the right to transfer the business because MyTheresa wasn’t being used as collateral for its bonds.

“As publicly disclosed, MyTheresa was already an unrestricted, non-guarantor subsidiary not part of our lenders’ collateral in addition to in which will remain outside of the collateral. This particular reorganization was expressly permitted by the company’s credit documents,” a Neiman Marcus spokesperson told CNBC in an emailed statement.

Marble Ridge, however, believes Neiman Marcus improperly categorized its MyTheresa business as unrestricted, meaning in which can do whatever in which wants with in which.

The fund also maintains in which the company could have been insolvent when in which transferred the MyTheresa, potentially causing in which to have defaulted on its debt.

“Rather than allowing the theft of assets by CPPIB in addition to Ares, we believe a more responsible board, given its fiduciary obligations, would likely have engaged in a strategic review to maximize value for the benefit of all of the company’s stakeholders.”

Marble Ridge is actually urging Neiman Marcus to sell certain assets to pay down its debt, in lieu of its transfer of MyTheresa.

Neiman Marcus earlier This particular month reported $4.9 billion in sales for its fiscal year ending July 2018 in addition to net earnings of $251 million.

Ares in addition to CPPIB did not immediately return requests for comment.

Correction – This particular story has been corrected to more accurately reflect Marble Ridge’s claims against Neiman Marcus. in which also previously inaccurately said in which in which is actually urging Neiman Marcus to sell Bergdorf Goodman.

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