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Neiman Marcus Group Inc. is preparing to file for bankruptcy protection as soon as Wednesday, with plans to restructure its debt in hopes of reopening most of the luxury chain’s stores after the coronavirus pandemic, WSJ Pro Bankruptcy reported. The lenders who would steer Neiman through bankruptcy are considering several options, including selling the business outright or closing some of Neiman’s 43 department stores to continue operating in a slimmed-down form. The company is near a debtor-in-possession financing agreement with existing lenders. The company has about $4.7 billion in debt. Neiman failed to make interest payments last week, starting a clock on a potential bankruptcy filing. One of the missed payments had a grace period of just five days. Reuters earlier reported that Neiman could file for bankruptcy protection as soon as this week. A potential buyer is Saks Fifth Avenue parent Hudson’s Bay Co., which could make an offer for the troubled retailer after Neiman tips into bankruptcy. Saks has tried unsuccessfully to merge with its rival three times in the past decade.

Lord & Taylor is exploring filing for bankruptcy protection after it was forced to temporarily shut all of its 38 U.S. department stores in the wake of the coronavirus outbreak, Reuters reported. It is one of several options that the retailer and its advisers are exploring, which also include trying to negotiate relief from creditors and finding additional financing. Fashion rental service start-up Le Tote acquired Lord & Taylor last year from Saks Fifth Avenue owner Hudson’s Bay Company for C$100 million. Hudson’s Bay kept ownership of some of Lord & Taylor’s real estate and assumed responsibility for its rent payments, amounting to tens of millions of dollars a year. Le Tote also owes Hudson’s Bay C$33.2 million stemming from a promissory note from the deal. Le Tote acquired Lord & Taylor to expand beyond e-commerce into brick-and-mortar stores. It acquired Lord & Taylor’s operations, including its merchandise inventory, online business and most of its employees. As part of the deal last year, Hudson’s Bay also secured an ownership stake in Le Tote and two seats on the company’s board. Hudson’s Bay representatives have since stepped down from the board.

J.C. Penney Co. received an offer for about $300 million in new financing just before it started the clock on a potential bankruptcy filing, Bloomberg News reported. The retailer’s decision to skip a debt payment on April 15 and start a 30-day countdown to default took some of its investors by surprise because the chain had just paid April rent on its stores. What’s more, it had cash to make the bond payment, and creditors are interested in providing J.C. Penney with financing out of bankruptcy. The offer came from creditors who are in a group of first-lien and second-lien lenders that is organized with advisers at Stroock & Stroock & Lavan LLP and Evercore Inc. The loan would be secured by real estate that J.C. Penney hasn’t already pledged to other debt. Separately, first-lien creditors are exploring alternatives that could see them offer financing backed by the unencumbered real estate. That creditor group, which includes KKR & Co. and Ares Management Corp., is being advised by White & Case LLP and Houlihan Lokey Inc.

Neiman Marcus Group Inc. is the latest retailer to skip a payment owed to bondholders as the coronavirus pandemic keeps stores closed, setting a clock ticking for the company to restructure its debt or file for bankruptcy, WSJ Pro Bankruptcy reported. The luxury retailer didn’t make several bond coupon payments due on Wednesday. The missed payments set in motion grace periods of between five and 30 days for Neiman to make the payment before creditors can take action. Neiman also has nearly $115 million coming due on its debt later in April. Marble Ridge Capital LP said in a letter yesterday to Neiman’s board of directors that the company is in default and that the fund will pursue all remedies to protect its rights. A bankruptcy filing for Neiman would mark a blow for private-equity firm Ares Management Corp. and the Canada Pension Plan Investment Board, which bought Neiman Marcus in 2013 for $6 billion including debt. The previous owners were private-equity firms TPG and Warburg Pincus LLC, which paid about $5.1 billion for the company in 2005.

J.C. Penney Co. said that it skipped a $12 million interest payment owed to bondholders, one of the first major retailers to buckle under the strains of the coronavirus pandemic, WSJ Pro Bankruptcy reported. With its stores shut, J.C. Penney said yesterday in a securities filing that it skipped the payment to evaluate strategic alternatives. Other struggling chains, including Neiman Marcus Group Inc. and J.Crew Group Inc., also have been in negotiations with creditors this month. For J.C. Penney, the missed payment kicks off a 30-day grace period before a debt default becomes official. The company has been in negotiations with lenders to restructure its obligations or secure financing for a potential bankruptcy filing.

Best Buy Co. Inc. said yesterday that it would furlough about 51,000 hourly U.S. store employees and that its sales dropped about 5 percent in the first two months of the current quarter, as the electronics retailer kept its stores shut due to the coronavirus pandemic, Reuters reported. The company said that starting next week, some corporate employees would also participate in voluntary reduced work weeks and furloughs, while its top management and board would take a pay cut. Best Buy, however, would retain about 82 percent of its full-time store and field employees. The company said sales grew about 25 percent during an 8-day period ended March 20, a day before the company announced its decision to switch to a curbside delivery model, as people shopped for work-from-home equipment, gaming-related products as well as products needed to freeze food. Best Buy added that domestic online sales surged over 250 percent from a year earlier, with half the sales coming from customers who picked-up their products from stores. However, store closures and decreased footfall have dented demand, and sales dropped 30 percent from March 21 through April 11, Best Buy said.

U.S. retail sales likely suffered a record drop in March as mandatory business closures to control the spread of the novel coronavirus outbreak depressed demand for a range of goods, setting up consumer spending for its worst decline in decades, Reuters reported. The report from the Commerce Department to be released today would come as millions of Americans are unemployed, and strengthen economists’ conviction that the economy is in deep recession. States and local governments have issued “stay-at-home” or “shelter-in-place” orders affecting more than 90 percent of Americans to curb the spread of COVID-19, the respiratory illness caused by the virus, and abruptly stopping the country. According to a Reuters survey of economists, retail sales probably plunged 8.0 percent last month, signaling the biggest decline since the government started tracking the series in 1992. Retail sales fell 0.5 percent in February.

J.C. Penney Co. Inc. is exploring filing for bankruptcy protection after the coronavirus pandemic forced the U.S. retailer to temporarily shut its 850 department stores, upending its turnaround plans, Reuters reported. The Plano, Texas-based company has access to enough cash to survive in the months ahead, even as revenue dries up because of the store closures. Still, the company is contemplating a bankruptcy filing as one way to rework its unsustainable finances and save money on looming debt payments, which include significant annual interest expenses. Concerns about prolonged store closures and customers remaining sparse even when outlets eventually reopen have also factored into J.C. Penney’s deliberations. J.C. Penney has not made any final decisions on how to address its strained finances. The retailer is also considering asking creditors for breathing room through transactions that would rework debt outside of bankruptcy court proceedings. There is also a possibility that J.C. Penney will be able to secure rescue financing.

A bankruptcy judge has approved Fairway Market’s decision to award more than $1 million worth of bonuses to top employees who are steering the company through bankruptcy, although he added the grocer’s workers also probably deserve some extra cash, Crain's New York Business reported. “The work of the folks on the firing line, at cash registers and loading docks, clearly has been outstanding,” Bankruptcy Judge James Garrity said at a hearing yesterday. “All employees deserve merit and consideration.” But most of Fairway’s nearly 3,000 employees aren’t getting awarded bonuses, at least not under the supervision of a bankruptcy court. About two dozen Fairway senior employees and executives were awarded nearly $1 million shortly before the supermarket filed for bankruptcy protection in January, and the company asked that these people be awarded an additional $1.1 million for seeing the company through chapter 11. The United Food and Commercial Workers Local 1500, which represents most Fairway employees, called the bankruptcy bonuses unjustified. So did the federal government. At today’s hearing, Justice Department official Greg Zipes highlighted the unfairness of management getting awarded bonuses.

Retailers and their lenders may be holding off for now because of the inability to hold liquidation sales (whether a fraction of stores or an entire fleet in a business wind down), Retail Dive reported. Nonetheless, the pandemic has been a cataclysm for the market, bringing foot traffic and store sales to a halt for retailers that don't sell essential items and forcing retailers to scramble for cash. Now, protracted closures are eating into retailers' liquidity cushions and loan availability. And few, if any, observers expect retail trends to return to their pre-pandemic normal after stores re-open, for those that do indeed re-open. "I think we're now going to see a historic number of retail, restaurant, hospitality and experiential related concepts filing for bankruptcy," said Craig Solomon Ganz, a partner with law firm Ballard Spahr. March and April have brought a steady march of credit downgrades to the retail sector based on conditions created by the COVID-19 pandemic and the efforts to slow it. In early April, Fitch downgraded nine retailers in a single day, including some with relatively healthy balance sheets. Others have been downgraded into or deeper into junk territory by Fitch and S&P as already precarious sales and liquidity trends have been rocked by the current environment. Modell's, which filed in early March, has put its chapter 11 case on ice for now. Pier 1 suspended a bankruptcy auction for its assets and was granted permission to stop paying rent and vendors as it closes its store fleet. Plans for both retailers to permanently close stores are on hold for the simple reason that retailers can't hold going-out-of-business sales if their stores are closed or consumers can't or won't leave their homes.