A bankruptcy judge signed off on Neiman Marcus Group Ltd.'s restructuring plan on Friday, ending one of the first major chapter 11 filings after the Covid-19 pandemic forced thousands of businesses to shut their doors this spring.
"Neiman Marcus today will get a second chance to remake itself," the company's lawyer Matthew Fagen of Kirkland & Ellis LLP said at a hearing in the U.S. Bankruptcy Court in Houston.
The ruling came a day after the company's chief critic, hedge-fund manager Dan Kamensky, was arrested and charged in connection with his efforts to acquire a prized piece of Neiman's business while shutting down a rival bid.
The luxury retailer is poised to come out of bankruptcy having shed $4 billion of its more than $5 billion debt load. Neiman will have new owners, including Pacific Investment Management Co., Davidson Kempner Capital Management LP and Sixth Street Partners LLC. Pimco will be the largest shareholder, controlling three of the company's seven board seats, according to court records.
Investors traded debt for equity, wiping out much of the debt Neiman accumulated through two separate leveraged buyouts, the latest of which put the company in the hands of Ares Management Corp. and the Canada Pension Plan Investment Board.
The company opted to hold on to the majority of its namesake stores in bankruptcy but to close most of its discount Last Call locations. Retailers often take advantage of the ease of breaking leases under chapter 11 code to close unprofitable stores.
Neiman is estimated to be valued at more than $2 billion as it emerges from bankruptcy, according to documents filed by its banker Lazard Ltd.
The bankruptcy proceedings took a dramatic turn Thursday, when federal prosecutors in New York arrested Mr. Kamensky, a bondholder who had waged a legal battle against Neiman and its owners since 2018. He was charged with securities fraud for allegedly suppressing bids for MyTheresa, the retailer's prized e-commerce business.
Mr. Kamensky, founder of hedge-fund firm Marble Ridge Capital LP, had accused Ares and CPPIB of wrongfully keeping MyTheresa for themselves in 2018, putting the business out of reach of Neiman's creditors.
In July, Ares and CPPIB agreed to settle Marble Ridge's claims by returning some shares in the e-commerce business, which they control, to unsecured creditors.
The MyTheresa settlement set in motion maneuvering by Mr. Kamensky to snap up shares in the e-commerce business at a low price and eventually landed him in the crosshairs of federal authorities.
In an inquiry in bankruptcy court, Mr. Kamensky admitted to using his pull with Jefferies LLC to get the investment bank to withdraw a competing bid for the shares so he could buy them on the cheap.
The MyTheresa settlement remains intact, though Neiman has sued Marble Ridge, seeking $60 million in damages and the cancellation of the firm's interest in the shares.