Marble Ridge ‘Grave Mistake’ Roils Neiman Marcus Bankruptcy

(Bloomberg) -- A money manager at Marble Ridge Capital LP acknowledged he committed a “grave mistake” after a federal watchdog accused him of misconduct for trying to stop a competing bidder from buying some of the assets of bankrupt Neiman Marcus Group Inc.

The hedge fund’s managing partner Dan Kamensky said he had been vying to buy shares of MyTheresa, the valuable online unit of Neiman Marcus, from creditors, according to a report from the U.S. Department of Justice. He sent messages to Jefferies, an investment bank that was also looking to buy shares in the unit, to try to influence that firm in a move that could upend the company’s planned reorganization process, the report said, citing Kamensky’s messages.

“Stand DOWN,” Kamensky wrote to an unidentified Jefferies executive over instant message, according to a report submitted by U.S. Trustee Henry Hobbs. “DO NOT SEND IN A BID.”

Kamensky later told the U.S. Trustee, a bankruptcy court watchdog, that his messages were “motivated by panic” that the Jefferies bid would interfere with his own proposal for the shares, according to the statement, which was filed in court papers. He then said that contacting and “trying to influence a potential rival bidder for property of the bankruptcy estate was wholly inappropriate.”

Representatives for Marble Ridge and Neiman Marcus declined to comment on the report.

Kamensky said he had been trying to buy the MyTheresa shares for several years and amassed $3.5 million in legal fees. Both his firm and Jefferies have active bids which are still being reviewed by Neiman’s committee of unsecured creditors. The court hasn’t yet taken any formal action against Kamensky, and the Trustee asked the judge to consider what “remedial measures” are appropriate given the findings of the investigation.

The altercation came to light in recent weeks when U.S. Bankruptcy Judge David R. Jones, who is overseeing the reorganization of Neiman Marcus, asked the U.S. Trustee to investigate Kamensky’s actions while he served on an official committee of unsecured creditors. Earlier this month, Marble Ridge said in court papers that Kamensky didn’t try to interfere with a potential Jefferies bid for the shares.

The inquiry is at the center of the bankrupt retailer’s plan to give the unsecured creditors equity in MyTheresa to resolve claims against the chain’s private equity owners. Neiman filed for bankruptcy in May and is seeking to cut its debt load by handing control to senior lenders.

Marble Ridge characterizes itself as the largest single unsecured creditor of Neiman Marcus as of its bankruptcy date, and has repeatedly has repeatedly attacked the company for actions including moving MyTheresa assets to a subsidiary out of its reach.

The U.S. Trustee expedited its investigation into Marble Ridge and reviewed around 3,200 pages of documents, according to the filing. In the messages, Kamensky “reiterated that he could go to jail” and said his request for Jefferies to stand down was “just a large misunderstanding,” said the report.

The case is Neiman Marcus Group Ltd. LLC, 20-32519, U.S. Bankruptcy Court, Southern District of Texas (Houston).

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