First JC Penney, Now Neiman Marcus Set To File For Bankruptcy

First JC Penney, Now Neiman Marcus Set To File For Bankruptcy

Yesterday we reported that ancient retail icon and anchor tenant at malls everywhere, JC Penney, was finally preparing to call it a day, and was set to file for bankruptcy protection, in the process ending lease payments and putting the thousands of malls in which it had an outlet in cash flow peril. A few hours later, rhe Texas-based department store chain disclosed in an SEC filing that it will not pay $12MM to bondholders that had been due. And while under the terms of the bond, due in 2036, the retailer has a 30 day grace period to make the payment before it is deemed to have defaulted, entering the grace period is usually a warning to customers and business partners – and especially vendors who immediately go Cash on Delivery – that a Chapter 11 filing is imminent.

While JC Penney’s default was long coming – not least due to the collapse in mall foot traffic long before the covid-crisis and the company’s untenable debt load which led to several near-death experiences in the past decade – it was the complete collapse in clothing store sales that was the tipping point. According to the Census Bureau, clothing store sales crashed more than 50% in March, an apocalyptic collapse for any levered retailer.

Indeed, JC Penney is just the beginning and on Thursday morning, Reuters reported that another mall anchor icon, luxury retaeiler Neiman Marcus Group, has also skipped a bond payment week to Marble Ridge Capital LP, according to a letter from the hedge fund to the luxury department store retailer sent Thursday, setting the heavily indebted chain on a path toward bankruptcy.

This confirms a recent report from Reuters according to which Neiman Marcus was preparing to file for bankruptcy. As Reuters adds, a Neiman bankruptcy filing would likely be contentious. A trustee for some of the company’s bondholders, including Marble Ridge, sued Neiman last year, claiming the company and its owners robbed investors of the value of luxury e-commerce site MyTheresa in the earlier debt restructuring.

The biggest loser from this waterfall of default which will collapse all cash flow payments from these massive retail giants, is the mall sector, which as a reminder was the target of the “Big Short 2” via the CMBX Series 6 BBB- index, and which plunged in late March making all those – such as Carl Icahn 0 who had bet on the collapse of that icon of US life, malls, very rich…

… and in fact, unlike the broader market which has staged a remarkable rebound in recent weeks, the mall-heavy Series 6 CMBX tranche continues to slide, and was just shy of all time lows at last check, which is a vivid reminder of what price discovery looks like when there is no Fed backstop (for now Powell is not buying deeply impaired CMBX tranches; that may change soon).

Once both JCP and Neiman Marcus file, that’s when the real downhill kicks in.


Tyler Durden

Thu, 04/16/2020 – 11:09


This post has been republished with permission from a publicly-available RSS feed found on Zero Hedge. The views expressed by the original author(s) do not necessarily reflect the opinions or views of The Libertarian Hub, its owners or administrators. Any images included in the original article belong to and are the sole responsibility of the original author/website. The Libertarian Hub makes no claims of ownership of any imported photos/images and shall not be held liable for any unintended copyright infringement. Submit a DCMA takedown request.

-> Click Here to Read the Original Article <-

About The Author

Tyler Durden

Zero Hedge's mission is to widen the scope of financial, economic and political information available to the professional investing public, to skeptically examine and, where necessary, attack the flaccid institution that financial journalism has become, to liberate oppressed knowledge, to provide analysis uninhibited by political constraint and to facilitate information's unending quest for freedom. Visit https://www.zerohedge.com

Leave a reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Welcome

Bringing together a variety of news and information from some of today’s most important libertarian thought leaders. All feeds are checked and refreshed every hour and pages auto-refresh every 15 minutes. External images are deleted after 30 days.

Time since last refresh: 0 second

Publish Your Own Article

Follow The Libertarian Hub


Please consider donating using any of the cryptocurrencies below or use the Brave browser to tip using Basic Attention Tokens (BAT). Your anonymous contributions help keep this website running for everyone to enjoy!

Donate

Take Control of Your Domain Names
The Ultimate Managed Hosting Platform

Weekly Newsletter

Newsletter Signup

Subscribe to our newsletter to receive a weekly email report of the top five most popular articles on the Libertarian Hub!

Weekly Newsletter SignupTop 5 Stories of the Week

Subscribe to our newsletter to receive a weekly email report of the top five most popular articles on the Libertarian Hub!