Neiman Marcus views the lawsuit filed against it by one of its debtholders alleging a $1 billion fraudulent transfer as an illegal scheme to injure the Dallas-based luxury retailer and “extract improper benefits for itself,” according to a countersuit filed by Neiman’s on Friday.
The original lawsuit, filed Monday by New York hedge fund Marble Ridge Capital, alleges Neiman Marcus illegally siphoned its $1 billion European e-commerce unit, MyTheresa, to its parent company in a transaction that was strategically planned to benefit Neiman’s private equity owners, Ares Management and Canada Pension Plan Investment Board.
Marble Ridge’s lawsuit also alleged that Neiman’s is insolvent and will be unable to repay a large sum of debt due in October 2020. Marble Ridge requested the court to appoint a receiver “to address this misconduct.”
Neiman’s countersuit, which was filed by Mike Lynn of Lynn Pinker Cox & Hurst, says Marble Ridge has “repeatedly disseminated false statements” accusing Neiman’s of being in default under its debt documents over the last several months.
“On information and belief, Marble Ridge is making these false statements to manipulate the price of Neiman Marcus’ debt so Marble Ridge can improperly profit on its trades and to attempt to extort value from Neiman Marcus,” the countersuit says. “Neiman Marcus believes this is not the first time Marble Ridge has engaged in such practices. Neiman Marcus is simply Marble Ridge’s latest target.”
In October, Neiman’s entered restructuring talks with its lenders and bondholders in an effort to avoid bankruptcy and extend its impending $4.7 billion due in debt. However, the following month they ended talks with no deal.
The MyTheresa transfer occurred in September, immediately after which Neiman’s alleges Marble Ridge began its public campaign against the department store, “sending letters filled with false statements” to Neiman’s and “simultaneously blasting the letters to the news media and industry publications.”
Neiman’s pointed out in its countersuit that it encouraged Marble Ridge to join one of the two creditor groups organized during the restructuring talks or to “form its own group to the extent that it was serious about participating in the process.” Neiman’s said the hedge fund never responded or joined either group.
“Instead, it has attempted to disrupt Neiman Marcus’ negotiations with the creditor groups by making false public statements that Neiman Marcus is in default under the debt documents,” the countersuit says.
In addition to its request for the court to dismiss Marble Ridge’s lawsuit, Neiman’s is claiming defamation and business disparagement against Marble Ridge, arguing the hedge fund’s “false and defamatory words” have damaged Neiman’s reputation and caused “recent credit ratings downgrades.”
The litigation landed in the 116th District Court of Judge Tonya Parker in Dallas County. The case number is DC-18-18371.
Marble Ridge lawyers did not immediately respond to a request for comment.
Marble Ridge is represented by Josh Hedrick of the Dallas litigation boutique Hedrick Kring, as well as New York attorneys Sigmund Wissner-Gross and May Orenstein of Brown Rudnick.
Other lawyers from Lynn Pinker representing Neiman’s include Elizabeth Ryan, Chris Patton and Chisara Ezie-Boncoeur.