A view of Neiman Marcus at The Shops at the Hudson Yards during the coronavirus pandemic on April 22, 2020 in New York City.

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Neiman Marcus could file for bankruptcy as soon as Sunday and is in talks with its current lenders about raising roughly $600 million in emergency financing to fund operations through the restructuring, people familiar with the situation tell CNBC.

In bankruptcy, the retailer will work to flush its more than $4 billion of debt leftover from its sale to Ares Management and Canada Pension Plan Investment Board in 2013.  Even before the coronavirus pandemic struck, that debt acted as an albatross, limiting its ability to invest in technology as new competitors like Yoox’s Net-A-Porter encroached on its once untouchable position in luxury retail. 

Neiman Marcus is hoping its status as a luxury brand will help it emerge from the crisis a leaner and stronger company. The department store chain also owns high-end Bergdorf Goodman in New York’s midtown. 

It does not plan to close any of its 43 Neiman Marcus stores as part of its planned Sunday bankruptcy filing, the people said. Still, retailers sometimes whittle down their store footprint while in bankruptcy.

Neiman Marcus previously announced plans to wind down its off-price chain, Last Call, and shutter the majority of its 24 stores by the first quarter of its fiscal 2021, to focus on luxury. 

All of Neiman Marcus’ stores have been shut since March 17 due to the coronavirus pandemic.  Most of its 14,000 workers have also been furloughed.

Hudson’s Bay Company, which owns Neiman Marcus competitor, Saks, has been considered a logical suitor for Neiman Marcus, once it filed for a long-anticipated bankruptcy and shed itself of onerous debt. But with revenue for all retailers drastically reduced and markets rattled by the coronavirus pandemic, financing a large deal may be difficult. 

The people requested anonymity because the information is confidential. Neiman Marcus and Ares declined to comment. Hudson’s Bay Company and CPPIB did not immediately respond to a request for comment.

Neiman Marcus will mark the first major retail bankruptcy of the coronavirus pandemic, which has jolted the economy and crippled the already struggling retail industry. It has also made the prospect of managing a bankruptcy a difficult one: it is hard to plan liquidation sales of select stores, or entire store-bases, with non-essential retailers ordered shut. As various states make plans to begin lifting their coronavirus restrictions, retailers must decide how to handle varying mandates.  

Landlords, meantime, will be forced to assess the value of a retailer on its property with little insight as to how easily replace they can them.

A Neiman Marcus bankruptcy could deal a massive blow to Related Companies’ glitzy Hudson Yards shopping mall in Manhattan, where the high-end department store is an anchor tenant, spanning multiple levels with a number of restaurant options. Should Neiman Marcus ever shut its store there, it could trigger requests for rent reductions from other retailers there or even an exodus of tenants.

A representative from Related did not immediately respond to CNBC’s request for comment.

Retail pain has accelerated throughout the industry.  Gap warned in a filing this week it may not have enough cash flow to sufficiently fund its operations and said it is looking to renegotiate or defer the terms of its leases. It also said it could provide “no assurances” it will be “able to recommence” business at existing leases at all.   

And while malls had in recent years sought to bring “experiential” options into its properties, like gyms, those too have fallen under pressure as the government has recommended “social distancing” to manage the pandemic.

Similar questions may confront J.C. Penney, which is considering its own bankruptcy filing, people familiar with the matter told CNBC. Any potential bankruptcy filing for the department store, though, is at least a few weeks away. It has yet to finalize the detail of any bankruptcy plans and determine how much in bankruptcy financing it would need, people familiar with the matter tell CNBC. 

A spokeswoman for J.C. Penney declined to comment. 

CNBC’s Lauren Thomas contributed to this report

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