Deutsche Bank AG , one of Neiman Marcus Group Ltd.’s lenders, says the bankrupt retailer has breached the terms of a $760 million loan, raising concerns about the company’s ability to restructure its business, the Wall Street Journal reported. The department-store chain reported that it overvalued the inventory backing the asset-based loan by $159 million, Deutsche said in a Friday court filing. The overvaluation means Neiman is in default, Deutsche said. Deutsche Bank said that it has “concerns” about allowing Neiman to continue to have access to its cash unless the luxury retailer replenishes a cash collateral reserve meant to protect the bank and other lenders against losses, according to the bank’s court filings. Neiman Marcus filed for bankruptcy in early May with a $675 million bankruptcy loan from large holders of its term loan, including Pacific Investment Management Co., Davidson Kempner Capital Management LP and Sixth Street Partners LLC. The company, however, is also relying on a deal with Deutsche Bank and other lenders of the $760 million asset-based loan — Neiman’s most senior debt — to use their cash to fund its business during the chapter 11 case.
