Joseph Moldovan Quoted by WWD on Neiman Marcus Bankruptcy Proceedings

Morrison Cohen Partner and Chair of the firm's Business Solutions, Restructuring & Governance practice Joseph T. Moldovan was quoted in the article “Neiman's Consignment Vendors Who Await Payments” reported by WWD on August 4, 2020.  The article highlights the difficult situation consignment vendors find themselves in during bankruptcy proceedings as the debtor, its lenders, and the consignors engage in a tug-of-war over rights to consigned merchandise and the proceeds of sale of consigned merchandise.

The article points out that the issue at play in these proceedings is the ownership status of consignment merchandise provided to Neiman prior to its bankruptcy, and the efforts Joe and other consignor counsel took to protect the rights of consignors, which included obtaining a court order that prohibited lenders from placing liens on consigned goods.  Joe, who represents a number of creditors in Neiman's bankruptcy, explained why it was critical that consignors take immediate action at the start of the case to safeguard the sale of their goods during such proceedings.  

“Every possible piece of collateral that exists in the universe, [lenders] want to support their liens and any financing they provide,” said Joe.  “Normally, the debtor has no problem with that, except when you have consignment merchandise, it's not yours to give.  So, the consignors do a fire drill at the start of the case to say, 'whoa, slow down, you can't lend against our goods, they don't belong to the company.”