An investor group that comprises investment firm Mudrick Capital Management LP and Daniel Loeb’s hedge fund Third Point LLC plans to challenge a US$600 million financing package that Neiman Marcus Group has lined up for its looming bankruptcy, and will push the U.S. department store operator to sell itself, people familiar with the matter said on Sunday.

Neiman Marcus have all but is preparing to seek bankruptcy protection in a Dallas federal court as soon as Monday, the sources said. The debt-laden company’s sales all but evaporated after the coronavirus outbreak forced it to temporarily shut all 43 of its Neiman Marcus locations, roughly two dozen Last Call stores and its two Bergdorf Goodman stores in New York. The location and timing of the bankruptcy filing had not been finalized as of Sunday, the sources cautioned.

Neiman Marcus declined to comment.

Mudrick submitted a US$700 million proposal for so-called debtor-in-possession (DIP) financing to Neiman Marcus in recent days, the sources said. In addition to Third Point, hedge fund Fir Tree Partners is also likely to be part of the group proposing the financing, they said.

Neiman Marcus plans to instead use a US$600 million loan it spent weeks negotiating with creditors that include Pacific Investment Management Co, Davidson Kempner Capital Management LP and TPG’s Sixth Street Partners, the sources said.