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Neiman Marcus Group Inc. is closing in on a deal with a group of lenders led by Pacific Investment Management Co. that would slash the department-store chain’s debt load by more than half in exchange for control of the company, Bloomberg Law reported. The plan would be part of a bankruptcy court filing that could come as soon as this week. Lenders including Pimco, Davidson Kempner Capital Management and Sixth Street Partners would provide the company with more than $600 million to stay in business during the court process. Those lenders and others would swap their debt for equity in the reorganized company. Neiman has struggled for years to find its footing as traffic fell at malls and department stores. The Dallas-based company reached a deal with creditors last year that bought it time for a turnaround. But with its stores shuttered since March by the Covid-19 pandemic, its efforts to cut debt took on a new level of urgency.

Along with hundreds of other brick-and-mortar businesses, J.Crew closed numerous stores in March — 500, in its case — and furloughed 11,000 employees as state governors issued orders to close nonessential businesses to curb coronavirus infection rates, NBC.com reported. It expects to lose $900 million in sales because of the store closings, according to a filing in U.S. Bankruptcy Court in Richmond, Virginia, by Michael Nicholson, the company's chief operating officer. A chapter 11 filing doesn't mean your favorite store is about to disappear. Instead, chapter 11 offers a company a way to reshape the business by reorganizing debt and eliminating costly real estate, said Kevin Carey, a former bankruptcy judge and partner with the Hogan Lovells law firm. Chinos Holdings, which runs 182 J.Crew stores, 140 Madewell stores and 170 J.Crew Factory stores, said the restructuring won't change much for shoppers. Its customer programs, including any loyalty programs, gift cards and returns and exchanges, will operate as usual, the company said. That store credit card bill also won't disappear, said Ken Rosen, a financial restructuring partner at Lowenstein Sandler. "Bankruptcy will give no relief to a consumer who owes money on a credit card," he said. The uncertainties surrounding the virus and the government's economic response make it difficult to estimate how many bankruptcy filings will result from the crisis and when they may happen. But with a growing number of people out of work, it's unlikely that retail will see a fast recovery. "Consumers and businesses face growing financial challenges due to the pandemic, and bankruptcy provides a vital safe harbor from their mounting debts," said ABI Executive Director Amy Quackenboss. "We anticipate business filings to start rising this month and consumer filings to start to accelerate in early summer," she said.

Hertz Global Holdings Inc. is preparing to file for bankruptcy soon if the company fails to rework its debt and can’t get lenders to extend a grace period on a missed payment, Bloomberg News reported. The rental-car company has been talking to some of its creditors about how to ease its burden without going through bankruptcy, but negotiations have been a struggle and the company is preparing to file for chapter 11 court protection. Hertz could file for bankruptcy today if a deal isn’t reached. The situation could still change and a filing isn’t definite, according to sources. The company expanded its roster of advisers to include FTI Consulting Inc., which specializes in restructuring and bankruptcy cases. Sweeping travel restrictions tied to the Covid-19 outbreak and the global economic collapse have hammered revenue, particularly in the rental-car business. While the U.S. government has a $50 billion bailout plan for airlines, Hertz hasn’t been able to access that program, and its chief rival, Avis Budget Group Inc., had a stronger balance sheet going into the crisis.

The plan to sell Victoria’s Secret to a private equity firm was mutually terminated on Monday after the buyer, Sycamore Partners, tried to back out of the deal because it said that it did not agree with steps the lingerie brand took in response to the coronavirus pandemic, the New York Times reported. L Brands, which also owns Bath & Body Works, had agreed in February to sell a majority of Victoria’s Secret to Sycamore Partners for about $525 million. The transaction was expected to close in the second quarter. But as the pandemic forced Victoria’s Secret and many other retailers to temporarily close stores and furlough employees, Sycamore had second thoughts. The firm first tried to renegotiate the purchase, and then filed suit in Delaware to terminate the agreement, claiming L Brands had breached the terms of the deal. L Brands countersued, calling the attempt “invalid.” In a statement yesterday, Sarah Nash, a director at L Brands and the company’s incoming chairwoman, cited the “extremely challenging business environment” for retailers as part of its decision to put an end to the deal.

High-end cookware chain Sur La Table Inc. is preparing for a potential bankruptcy filing after the pandemic forced it to close stores and cancel cooking classes, Bloomberg News reported. The chain, with about 125 stores, is also pursuing a sale. For companies like Sur La Table that offer classes and other in-store experiences, the nationwide shutdown has been even more pernicious. The chain, owned by alternative investment firm Investcorp, temporarily closed its stores across the U.S. in March. Sur La Table traces its roots to Seattle’s Pike Place Market in 1972. With its popular classes, the company capitalized on consumers’ growing interest in spending on experiences rather than more goods. It has grown from 86 stores when Investcorp acquired it in 2011 for $146 million, according to a filing and statement at the time.

Women’s clothing retailer J. Jill Inc. has hired advisers to help fix its balance sheet after it had to close its stores due to the coronavirus pandemic, WSJ Pro Bankruptcy reported. The company has hired investment bank Centerview Partners and law firm Kirkland & Ellis LLP as advisers. Meanwhile, a group of the retailer’s lenders has hired Guggenheim Partners and Stroock & Stroock & Lavan LLP. J. Jill is aiming to obtain relief from lenders on certain of its loan agreements, as well as to potentially obtain some additional liquidity to tide it over until its business can reopen.

A bankruptcy judge extended the suspension of Modell’s Sporting Goods Inc.’s bankruptcy case until the end of May, allowing the retailer to stop paying rent as it waits for New York and neighboring states to lift restrictions on most shopping, WSJ Pro Bankruptcy reported. Bankruptcy Judge Vincent Papalia yesterday also ordered mediation between Modell’s and the many landlords clamoring for more certainty that the retailer will ultimately pay its back rent. Modell’s, a more-than-century-old New York-area sporting-goods retailer, filed for bankruptcy in March to liquidate its inventory but quickly pivoted when New York and other states imposed restrictions on all nonessential shopping, laying off all employees at its stores and distribution centers as well as most corporate office workers. In March, Judge Papalia allowed Modell’s to “mothball” its 134 stores until May 10 rather than continue with liquidation sales, citing the extraordinary circumstances created by the coronavirus pandemic. The judge also allowed Modell’s to stop paying rent, despite protests from landlords.

J.C. Penney Co. and the lenders it is asking to finance a potential bankruptcy are struggling to find sufficient company assets to secure the additional debt, Bloomberg News reported. With inventory going stale in idled stores and real estate valuations slipping amid the coronavirus pandemic, they’re recalculating the value of collateral that secures existing debt, and trying to determine whether the company can back another sizable loan. The company is negotiating with banks supporting its asset-based credit facility and lenders behind its first-lien debt about a bankruptcy loan, Bloomberg previously reported. Options that would avoid a bankruptcy filing altogether are also still being discussed, some sources said. A representative for J.C. Penney, based in Plano, Texas, declined to comment. Management was originally hoping to raise as much as $1 billion. If new collateral can’t be lined up, it could strengthen a faction of creditors who favor liquidating J.C. Penney.