For two long years, hedge fund Marble Ridge Capital has railed against Neiman Marcus’ spinoff of its e-commerce business, MyTheresa. That 2018 deal was certainly very good for Neiman’s owners, Ares Management and the Canadian Pension Plan Investment Board, but less so for Neiman’s creditors, including Marble Ridge, removing as it did one of the troubled luxury’s retailers only lucrative assets and leaving Neiman essentially worthless, a fact acknowledged by Ares and the CPPIB when they put the company into bankruptcy protection back in May.

Marble Ridge founder Dan Kamensky did not hesitate to press his advantage, challenging the owners’ restructuring plan as a member of Neiman’ unsecured creditors committee and earning them a judicial tongue lashing. According to Kamensky, the transfer of MyTheresa out from under Neiman was fraudulent and designed to make sure that creditors like himself couldn’t seize it if Neiman defaulted, which it did. This may have been a headache in pre-bankruptcy days, but post-bankruptcy proved untenable, and so Ares and CPPIB struck a deal to give Neiman creditors a piece of MyTheresa.

Thing is, most Neiman creditors don’t want shares of an unlisted German e-commerce company. They want money. And here, Kamensky may have pressed his advantage a little too far.

Jefferies said Mr. Kamensky, a client, asked the bank to “stand down” from making a competing offer for the shares, according to an account of events by bankruptcy lawyer Richard Pachulski, who represents a committee of Neiman creditors. According to this account, Mr. Kamensky had hoped to buy the shares for 20 cents each before Jefferies considered making a higher offer of 30 cents…. Jefferies told Mr. Pachulski it had opted not to make an offer, he said, “because a significant client of Jefferies had insisted that Jefferies stand down….”

The judge overseeing Neiman’s bankruptcy said Wednesday he found Marble Ridge’s actions “alarming” and asked the government’s bankruptcy watchdog to look into the matter. In his order, the judge said the allegations might “potentially implicate” a criminal statute covering bankruptcy cases.

Hedge Fund Leading Battle Over Neiman Marcus’s MyTheresa Faces Inquiry [WSJ]

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