A creditor of Neiman Marcus Group Ltd. is questioning whether the struggling retailer defaulted on its debt by shuffling one of its most promising units beyond the reach of creditors.

Marble Ridge Capital LP said Friday in a statement that Neiman Marcus’ recent transfer of its MyTheresa unit was improper, and may have violated terms of company debt that the New York-based fund holds. Marble Ridge said it sent a Sept. 18 letter to the board demanding the rationale behind the transfer of MyTheresa, the German online luxury retailer, to Neiman Marcus’s corporate parent, a change that could block creditors from making any claims on the unit.

The switch lets Neiman Marcus’s owners, Ares Management LP and Canada Pension Plan Investment Board, “usurp this massive benefit” for no consideration to the company, Marble Ridge said. What’s more, Neiman Marcus was either insolvent at the time of the transfer or was made insolvent by the deal, said the fund, a distressed-debt investor that says it owns 8.75 per cent senior notes and term loans.

"MyTheresa was already an unrestricted, non-guarantor subsidiary not part of our lenders’ collateral and it will remain outside of the collateral,” a representative from Neiman said in a statement to Bloomberg. “This reorganization was expressly permitted by the company’s credit documents.” Representatives for Ares and CPPIB didn’t have an immediate comment on the letter.

Asset Disputes

Neiman Marcus is the latest retailer to ignite controversy over whether such transfers unfairly deprive creditors of claims on assets if a borrower needs to restructure. The dispute could presage a lawsuit over so-called fraudulent conveyance, in which a troubled company purposely moves healthy units beyond the reach of lenders ahead of a reorganization.

Neiman Marcus’ US$4.7 billion in debt gives it a 10 times leverage multiple, far in excess of its peers, Marble Ridge said in its letter. Much of it sells for US70 cents on the dollar or less.

The allegations echo complaints against retailers including PetSmart Inc. and J. Crew Group Inc., who made changes to their capital structures in a way that complicated restructuring talks.

“These recent actions threaten the viability of a storied franchise that includes marquee brands such as Neiman Marcus and Bergdorf Goodman,” Dan Kamensky, managing partner of Marble Ridge, said in the statement.