Saks Global hit another milestone in its journey through bankruptcy court on Friday.
Alfredo Pérez, the federal bankruptcy judge in Houston, signed off on the retailer’s plan to take in an additional $500 million — in the form of debt or preferred equity — when it exits Chapter 11.
The money will come from an ad hoc group of debtholders, the vast majority of which have also signed on to the company’s restructuring support agreement. If Saks Global exits bankruptcy with more than $700 million in liquidity, it will receive less exit financing.
Betsy Feldman, an attorney from Willkie Farr & Gallagher representing Saks, said: “We believe that this provision properly balances the global debtor’s need for funding and the commitment party’s desire not to commit more funds than are necessary to ensure success post emergence. This was extensively negotiated at arm’s length and in good faith, and numerous written term sheets were exchanged and the parties held multiple meetings. As is the case in every negotiation, the global debtors did not get everything they asked for, but the commitment letter represents the best terms on which the commitment parties were willing to lend.”
If Saks Global did not accept the terms of the financing, Feldman said it “left them without a commitment for exit financing and no real viable path to reorganization.”
In approving the financing package, Pérez said: “The debtor came into this case very liquidity constrained. The biggest issue was the inability to provide merchandise for the stores. I think that the proposed funding and having liquidity in the hundreds and millions of dollars is a proper exercise of the debtor’s business judgment, and I think it’s a key cornerstone to this debtor being able to reorganize.”
Saks Global told WWD: “This capital, together with other anticipated financing sources, will provide the company with sufficient liquidity to support its operations and invest in key areas of the business to support its long-term growth upon emergence. The commitment letter reflects Saks Global’s capital partners’ confidence in its go-forward vision, guided by its relentless devotion to the luxury customer.”
Saks Global expects to exit bankruptcy this summer and has developed a longer-term business plan that will chart its course forward, although the details have not been released yet.
While Saks Global had a mad dash into bankruptcy, with disgruntled vendors and beefs with partners like Amazon and Simon Property Group, the rough spots have been ironed out in the court process. After initial opposition to the debtor in possession financing needed to keep the company alive, Amazon has been relatively quiet. And Saks Global said at the virtual hearing on Friday that it had agreed in principle to a resolution with Simon, a key landlord. Brands are again shipping goods to the retailer.
But unsecured creditors — including vendors — are still looking for assets or other sources of value in the company that could be used to recoup losses. That has included an effort to get former chief executive officer Richard Baker to provide documents under bankruptcy court rules, including information “relating to the acquisition of Neiman Marcus Group.” That $2.7 billion acquisition in December 2024 was meant to recapitalize the business while also building scale and trimming costs. The integration of Saks and Neiman’s got underway quickly last year, but the retailer almost immediately ran short of money and had trouble getting brands to ship it enough goods to sell and, in turn, fill up its coffers.
