Neiman Marcus Foe Kamensky Sentenced to Six Months in Prison for Bankruptcy Fraud
By Soma Biswas
Hedge-fund founder Dan Kamensky was sentenced to six months in
prison for bankruptcy fraud over his attempt to quash a rival bid
for shares of a Neiman Marcus Group Ltd. business that he wanted to
The sentence, handed down in a federal courtroom in New York,
falls short of the 12 -to-18-month prison term sought by
prosecutors but exceeds the punishment sought by Mr. Kamensky's
lawyers, who asked that he only be put on probation and be required
to do community service.
The founder of hedge-fund firm Marble Ridge Capital LP, Mr.
Kamensky admitted to prosecutors that last year he tried to
sideline a competitor's bid for shares of Mytheresa, a thriving
e-commerce business formerly owned by Neiman Marcus, which was at
the time in bankruptcy.
His actions amounted to a criminal violation of bankruptcy law
because, as a member of an official creditors committee in the
Neiman Marcus chapter 11 case, he had an obligation to look out for
all of the company's creditors, not just his firm's own financial
The bankruptcy-fraud charge he pleaded guilty to in February
carried a maximum five-year prison sentence. In addition to the
six-month prison term, Mr. Kamensky was sentenced Friday to six
months of supervised release under home detention.
Mr. Kamensky's lawyers had argued he ought to be spared prison
time and instead be put on probation and required to do community
service, saying his actions weren't premeditated or planned and
ultimately didn't harm other Neiman Marcus creditors.
Prosecutors disagreed, telling Judge Denise Cote that allowing
Mr. Kamensky to avoid prison would send the wrong message about the
seriousness of his conduct.
Mr. Kamensky, a former bankruptcy attorney with deep experience
investing in troubled companies, "used his skills to corrupt the
bankruptcy process," lawyers for the U.S. attorney's office in
Manhattan said in their sentencing recommendation.
Mr. Kamensky, 48 years old, is a well-known figure in the
tightknit world of big corporate restructurings and distressed-debt
Before starting his own hedge fund in 2015, Mr. Kamensky worked
at law firm Simpson Thacher & Bartlett LLP, investment bank
Lehman Brothers Holdings Inc. and hedge-fund manager Paulson &
Before his arrest, Mr. Kamensky had waged a battle for more than
two years against Neiman Marcus and its private-equity backers over
Mytheresa, a fast-growing online subsidiary. He took issue with a
spinoff transaction that he said deprived Neiman's creditors of its
crown jewel, while rewarding the retail chain's owners.
Neiman Marcus filed for bankruptcy last year after the
coronavirus pandemic shut down nonessential shopping across the
country. During the course of the bankruptcy, Mr. Kamensky helped
extract a concession from Neiman's owners to return some of their
shares of Mytheresa.
The Mytheresa shares were an important part of the recovery for
unsecured creditors, and Mr. Kamensky offered to buy those shares
from other creditors for cash upfront, hoping for a profit once
Mytheresa went public down the line.
A potential competitor, however, showed up proposing a similar
deal for the shares, at a higher price than he was offering. When
Mr. Kamensky learned of the rival bidder, he told its investment
bank, Jefferies LLC, to stand down and not submit an offer,
according to a government inquiry into his actions.
Write to Soma Biswas at email@example.com
(END) Dow Jones Newswires
May 07, 2021 12:50 ET (16:50 GMT)
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