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Fabled retailer Neiman Marcus, now in chapter 11, has some bad news for roughly 430 current and retired executives: A chunk of their expected retirement savings, worth some $120 million in total, just got evaporated, <em>CIO Magazine</em> reported. Making matters worse, the high-end chain’s CEO Geoffroy van Raemdonck is bagging as much as $6 million on bonuses, and he’s already picked up $4 million in bonuses. He and other top executives stand to collect as much as $10 million. The stiffed executives say that is unfair and some are threatening to sue. Meanwhile, Henry Hobbs, the acting federal trustee overseeing the Neiman bankruptcy, recommended that the court reject the bonuses to van Raemdonck and his lieutenants unless the payouts can be tied to performance. The lost retirement benefit is in the form of supplemental retirement plans for high-paid executives, which the company canceled as part of its proposed bankruptcy reorganization. Some of this money is deferred pay that the employees agreed to fork over years before. Unlike pensions and 401(k)s, these supplemental plans don’t receive government protection. Squelching them saves the company $120 million between now and 2028, according to court filings. Depending on the person, the payouts range from $17,000 to $344,000. The people who lost the benefit can now file as unsecured creditors, like unpaid merchants that supplied Neiman with goods. They likely would receive just a fraction of what they are owed.

Proceedings for the eviction of retail tenants are picking up across the country as courts reopen and states’ moratoriums on evictions are expiring or getting curtailed as the economy reopens, the Wall Street Journal reported. In Miami, a luxury-shopping-center landlord began legal proceedings to evict Saks Fifth Avenue two weeks ago for nonpayment of rent amounting to $1.9 million as of early July. In other parts of the country, smaller retail landlords also have filed lease termination and eviction notices to restaurants, bridal shops, entertainment operators and co-working tenants that haven’t paid rent and weren’t able to come to mutually agreeable modifications to their leases. Before the pandemic, most of these disputes end up getting resolved before the sheriff throws them out, but lawyers said they are seeing higher volumes of disputes which could lead to more evictions. Tens of thousands of leases have been modified, including deferrals or discounts, landlords say, in exchange for lease extensions or other concessions. While overall retail rent collections have improved to 77 percent in July from around 54 percent in April, some tenants, particularly from the apparel, fitness and theater categories, have continued to struggle with payments, according to data from Datex Property Solutions, a real-estate data firm that tracks rent collection on thousands of properties across the country. During the coronavirus-shutdown period that started mid-March and extended to as late as August in some cities, tenants have implored their landlords for deferrals and lower rents to stay in business. States also imposed moratoriums on commercial-real-estate evictions, which offered temporary respite until they expire. New York Gov. Andrew Cuomo extended the state’s moratorium until Sept. 20 from a previously extended Aug. 20 deadline. Landlords said they have modified tens of thousands of leases over the past few months, including deferrals or discounts in exchange for lease extensions or other concessions, such as the removal of clauses that prohibited certain types of tenants in the neighboring space, such as direct competitors or other uses of common-area space. But for some, negotiations reached a stalemate and landlords said they have no choice but to resort to litigation.

Chuck E. Cheese is looking for two more months to negotiate with its landlords over deferred rent, while it also proposes paying part of the full amount due, Bloomberg News reported. CEC Entertainment Inc., parent of Chuck E. Cheese and Peter Piper Pizza, asked to pay reduced rent depending on the status of its operations, rather than forgoing payments in full, attorney Alfredo Perez of Weil Gotshal & Manges, said at a status conference yesterday. The company reached an agreement with the unsecured creditors' committee that provides a sixty-day holdout period for CEC to pay landlords a portion of rent for restaurants that are either closed, open for takeout, or open with limited capacity, Perez said. Judge Marvin P. Isgur of the U.S. Bankruptcy Court for the Southern District of Texas to set hearings for next week for further objections on the matter. CEC earlier asked the court’s permission to put off paying rent for 141 locations that were closed for in-person dining as a result of government measures aimed at preventing the spread of the coronavirus. After getting Judge Isgur’s approval earlier this month to defer rent payments for roughly 21 days on top of the two-month deferral already allowed, CEC reached initial agreements with landlords at 40 of the locations. An additional 10 landlords have signed on to the settlements as of yesterday, while others are in various stages of “getting done,” Perez said.

McDonald’s Corp. is the subject of a lawsuit by more than 50 Black former franchisees in the U.S. who say they were driven out of business after being pushed by the company to set up shop in crime-ridden areas and denied financial help extended to White franchisees, Bloomberg News reported. The Black franchisees were steered to inner-city and urban areas with low-volume sales and high security and insurance costs, and were refused favorable franchise terms because McDonald’s unfairly graded their performance, according to a copy of a complaint filed Tuesday in Chicago federal court. The complaint couldn’t immediately be verified in court records. The 52 franchisees are seeking as much as $5 million in damages for each of more than 200 stores they operated. McDonald’s said in a statement today that it categorically denies the allegations that the franchisees were unable to succeed because of any discrimination by the company. The Black franchisees’ average annual sales of $2 million was less than McDonald’s national average revenue of $2.7 million from 2011 to 2016 and $2.9 million in 2019, according to the Ferraro firm. A historic high of about 400 Black McDonald’s franchisees in 1998 has dropped to less than 200 today because of the revenue shortfall, the franchisees said in their complaint.

Hertz Global Holdings Inc. wants to hand out a further $14.6 million in bonuses to executives, months after the car-rental company shelled out $16.2 million in extra pay meant to keep executives from leaving as the Covid-19 pandemic upended the travel industry, WSJ Pro Bankruptcy reported. Hertz filed for chapter 11 protection in May, its business shredded by pandemic-related restrictions. Before filing for bankruptcy, Hertz laid off thousands of employees and handed out retention bonuses to key leaders. The move was part of a trend in corporate bankruptcy, where distressed companies hand out retention bonuses, or “stay pay,” just before they file for bankruptcy protection. Retention payments are almost impossible for top executives to get after a company files for bankruptcy. Chief Financial Officer Jamere Jackson resigned this month and forfeited his retention bonus. Hertz is sealing much of the information about which employees are in line for the latest round of bonuses. The judge overseeing Hertz’s bankruptcy would need to sign off on the new round of pay enhancements, which the company detailed in court papers filed on Thursday. They are styled as “incentive” bonuses, which are supposed to drive performance.

Blue Star Donuts, the artisanal doughnut shop that grew to nearly a dozen locations in Oregon and California, has filed for chapter 11 protection, The Oregonian reported. In June, Blue Star announced that the COVID-19 pandemic had forced the company to close of a handful of its Portland-area locations, including its sprawling 2-year-old headquarters in downtown Portland. The doughnut shop is now down to four Portland-area locations and three in Southern California.

Neiman Marcus Group Ltd. is suing Marble Ridge Capital LP after a bankruptcy watchdog said the hedge fund’s founder illegally pressured an investment bank to drop its bid on a lucrative piece of the department-store chain’s business so he could buy it himself, WSJ Pro Bankruptcy reported. In the suit filed on Wednesday in U.S. Bankruptcy Court in Houston, Neiman is seeking more than $60 million in damages from the hedge fund. The retailer is also asking a judge to subordinate Marble Ridge’s claims against Neiman during its bankruptcy proceedings. Because unsecured creditors aren’t being paid in full, ranking the hedge fund’s claim below the other creditors would essentially wipe out its Neiman holdings. Marble Ridge, created by Daniel Kamensky, is liquidating after a bankruptcy watchdog said that the hedge-fund founder suppressed a bid for shares in Neiman’s valuable MyTheresa e-commerce unit from investment bank Jefferies LLC. Marble Ridge had already offered to acquire the shares at a discount and Jefferies was prepared to pay more. Because of Marble Ridge’s illegal actions, the lawsuit says, Neiman’s creditors lost out on the opportunity to cash out their MyTheresa shares for $42 million to $54 million. The Neiman lawsuit is part of a long-running dispute between the hedge fund and the department-store chain’s owners over the MyTheresa business.

Lord & Taylor, the first department store established in the United States, is officially going out of business, ending a nearly 200-year run, CNN.com reported. The bankrupt company announced yesterday that all of its 38 remaining stores and website have begun liquidation sales — a reversal from last week's decision to keep 14 locations open. "While we are still entertaining various opportunities, we believe it is prudent to simultaneously put the remainder of the stores into liquidation to maximize value of inventory for the estate while pursuing options for the company's brands," Ed Kremer, Lord & Taylor's chief restructuring officer said in a statement. Lord & Taylor filed for bankruptcy on August 2, joining a string of upscale retailers filing for chapter 11 in recent months. It initially announced 19 stores were closing, then increased that number to 24 a few weeks later. Now every store will close for good. 

Hertz Global Holdings Inc. is on the hunt for a bankruptcy loan totaling as much as $1.5 billion after regulators blocked the rental car company from pursuing a sale of what likely would be worthless stock, MarketWatch.com reported. Hertz this week reached out to existing creditors, as well as potential outside investors, for a debtor-in-possession loan sized at $1.1 billion to $1.5 billion. The car rental company sought chapter 11 in May without a deal with creditors and without a bankruptcy loan to fund its business, unusual for a company of Hertz's size saddled with roughly $19 billion in debt. At the time, the company's finance chief said Hertz had enough cash on hand to fund its operations at least through the initial stage of the case. But as the company's bankruptcy case drags on amid the continuing coronavirus pandemic fallout on travel, the need for financing has become more acute. Hertz's need for cash became more critical after the company pulled the plug on its plan to raise up to $500 million through the sale of its stock during the reorganization.