U.S. luxury retailer Neiman Marcus filed for Chapter 11 bankruptcy protection in May 2020. Its owners at the time were the Canada Pension Plan Investment Board (CPPIB) and Ares Management, who partnered to acquire Neiman Marcus in 2013 in a leveraged buyout.

In Sep 2020, Neiman Marcus emerged from bankruptcy protection. The restructuring plan eliminated more than $4 billion of debt, and Neiman Marcus changed ownership in the process. Its new owners include PIMCO, Davidson Kempner Capital Management and Sixth Street Partners LLC, while Ares Management and CPPIB exited their investment.

In the process of restructuring, CPPIB and Ares Management became the owners of Mytheresa, the Neiman Marcus owned online luxury retailer that was worth hundreds of millions of dollars (Mytheresa was valued at $2 billion dollars when it went public in Jan 2021).

Use the information above to

(1) identify and name the relevant agency costs.

(ii) explain in your words why creditors might choose to forgive the $4 billion of debt

(iii) comment on why CPPIB & Ares did not file for bankruptcy protection even though the $6 billion buyout in 2013 was primarily financed by dept.