Neiman Marcus’s bankruptcy ends, marked by nemesis arrest

Bloomberg

Neiman Marcus Group won court permission to leave behind the debts and drama that pushed it into bankruptcy, just a day after its harshest critic was arrested on federal charges stemming from the case.
A bankruptcy judge in Houston approved a plan that hands ownership to creditors in return for forgiving about $4 billion of Neiman’s $5.5 billion in borrowings.
When all the paper shuffling is done in the coming weeks, the luxury department store will be still be in business, presumably in better financial shape to compete in a cutthroat retail environment.
“Most companies have been taking on more debt during the pandemic. Neiman has shaved debt and increased cash liquidity” through the bankruptcy process,“which is an enormous competitive advantage,” Neiman’s Chief Executive Officer Geoffroy van Raemdonck said in an interview with Bloomberg.
Watching the process from the sidelines has been Dan Kamensky, co-founder of Marble Ridge Capital LP and the company’s nemesis for the last two years. Kamensky was charged with securities fraud, extortion and obstruction. Prosecutors say he pressured an investment bank into dropping plans to outbid Marble Ridge for a stake in Neiman’s valuable Mytheresa unit while the chain was in bankruptcy, and then sought to cover it up. He declined to comment through a spokesman.
This matters because Kamensky was co-chair for a committee of unsecured creditors, who were demanding a piece of Mytheresa to compensate for their losses and counting on Kamensky to help get the highest return for everyone. US officials contend he sought to take advantage of his role to benefit the portfolio he managed at the expense of the other unsecured creditors.
“I can’t comment on ongoing litigation,” van Raemdonck said. “But none of us expected it. It was a surprising part of the process.”
Neiman Marcus said in a statement it expects to be out of bankruptcy by September 30. The creditor’s group led by Pachulski ultimately agreed to drop objections to Neiman’s reorganisation in exchange for a stake in Mytheresa.