The debt structure of the U.S. department store Neiman Marcus is “unsustainable,” according to the American rating agency S&P. The news agency Reuters added that the company, which has more than $4 billion in debt, is preparing for possible bankruptcy protection after it was forced to close stores due to the Covid-19 pandemic.

On March 17, the company announced the closure of all Neiman Marcus, Bergdorf Goodman and Last Call stores throughout the U.S. It expects the stores to remain shut at least until April 30.

The news agency said that the retailer began holding talks with bondholders and lenders regarding possible funding to continue operating while under bankruptcy protection. Reuters noted however that Neiman Marcus is “several weeks away” from a potential bankruptcy and could even avoid it.

It noted that creditors could give the company more time to settle debt payments due this month and enable Neiman Marcus to reschedule its debt outside bankruptcy proceedings. Last year, the retailer avoided bankruptcy thanks to a debt restructuring agreement reached with creditors that extended its payment obligations.

S&P said that the department store is “contending with the disruption and recessionary conditions stemming from the coronavirus pandemic, the challenging trends facing department stores, and an unsustainable capital structure.”

It downgraded Neiman Marcus to ‘CCC-’ from ‘CCC’ with a negative outlook. It pointed out that the outlook “reflects the elevated potential that Neiman Marcus will undertake a restructuring this year, possibly in the next six months.”

Separately, another rating agency, Moody’s, cut the rating of the retailer J.C. Penney to ‘Caa3’ from ‘Caa1’ and lowered the outlook to negative from stable.

Moody’s stressed that J.C. Penney’s liquidity is adequate but store closures due to the lockdown to combat Covid-19 and the decline in consumer demand is expected to put pressure on the company’s Ebitda, impeding its turnaround strategy and pushing its leverage to “unsustainably high levels.”