Prices of loan related to US-based luxury retailer Neiman Marcus Group has dropped as it weighs options, including filing for bankruptcy, to reduce its $4.3bn debt.

The luxury retailer’s first-lien term loan, which is due for 2023, tumbled 8¢ to 10¢ on the dollar to about 38¢, reported Bloomberg, citing people familiar with the pricing matter.

According to the sources, the retailer’s approximately $500m of third-lien bonds due for 2024, which were trading at 18 cents, are now being priced at less than 10¢.

Although no official decisions have been taken, the luxury retailer has held initial negotiations with creditors about a bankruptcy loan to keep the firm operational while it creates a recovery strategy, reported the publication citing the people.

In an emailed statement to Bloomberg, the firm said: “Most businesses today are facing some degree of disruption from the unprecedented global economic environment resulting from the Covid-19 pandemic.

“We are evaluating all courses of action to preserve our financial strength so that we may continue serving our customers and associates, and being a great partner to luxury brands globally.”

Filing of Chapter 11 bankruptcy will enable the firm to keep its doors open, reduce its loans and close non-performing stores to cut down costs.

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In response to the Covid-19 situation, Neiman Marcus temporarily closed its outlets. It currently operates 43 namesake stores in the US, 24 Last Call locations, two Bergdorf Goodman stores in Manhattan, and one Mytheresa in Germany.

Just as other retailers, Neiman Marcus is preparing itself for a slump due to store the closures due to Covid-19. The company stated that it will continue to serve its customers through online channels.