Top executives of Neiman Marcus, which filed for bankruptcy in May, do not deserve bonuses of up to $10 million unless they can show they boosted the luxury department store chain’s earnings, a U.S. Department of Justice lawyer said.
Under U.S. bankruptcy law, “pay-to-stay” bonuses cannot be offered solely as incentives for Chief Executive Geoffroy van Raemdonck and other executives to remain with the retailer, said Henry Hobbs, the lawyer monitoring the bankruptcy, in court documents filed Tuesday.
Neiman Marcus’ bankruptcy was one of most prominent among retailers forced to temporarily close stores in response to the COVID-19 pandemic.
Many retailers worldwide are also failing to cope with market uncertainties and mounting debt during the crisis.
Neiman Marcus said in May it expected to emerge from Chapter 11 in early fall with a $750 million package from creditors that provided its initial bankruptcy loan.
It reached an agreement with creditors for $675 million of debtor-in-possession financing to aid operations while it attempts to reorganize.
The retailer also negotiated a plan with most of its creditors to cancel about $4 billion of debt in exchange for handing control to senior lenders led by Pacific Investment Management Corp, Sixth Street Partners and Davidson Kempner Capital Management.