Luxury fashion is no stranger to bankruptcy — with failed expansions, strategic missteps and downright bad luck sending companies to court every year.
Barneys New York went bankrupt in 2019 and Neiman Marcus Group filed in 2020, with brands across the rarified world of high-end fashion feeling the pinch.
But as much as the industry is familiar with the routine, a Saks Global bankruptcy — which remains a distinct possibility — would be a wholly different beast.
Saks Global is among the last of the department store consolidators standing, controlling 70 full-line stores with Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman, Saks Off 5th, Last Call and Horchow.
The company is the culmination of the retail dreams of Richard Baker, who acquired Neiman’s in a $2.7 billion deal at the end of 2024, and is now racing to line up new funding to avoid a bankruptcy filing or a partner, potentially Amazon, to help it navigate the process and be reborn.
Baker, who’s already chairman of Saks Global, last week took the reins as chief executive officer from Marc Metrick, shortly after the company fell behind on its debts, reportedly missing a more than $100 million interest payment.
Spokespeople for Saks Global did not respond to a request for comment Tuesday.
While the financing drama plays out — with rumors of a yacht sit-down between Baker and Amazon founder Jeff Bezos, or Authentic Brands Group as an interested party — fashion is left to watch and wonder what comes next.
Lawsuits for nonpayment from vendors like Gabriella Rossetti Inc., Catherine Regehr Inc. and Jovani Fashion start to tell the tale.
But if Saks Global were to go bankrupt, those claims would be joined by many more, from banks, bondholders, landlords, factors and the many other vendors who have been struggling for over a year to get the retailer to pay for goods already shipped and sold.
Attorney Jonathan Lazarow, co-chair of Ambrose, Mills & Lazarow’s Corporate Group, said a lot of fashion’s “bread and butter brands” count Saks Global as their biggest customer.
“It’s unclear whether or not they’re going to be able to make it out the other end” of a bankruptcy filing by the retailer, he said.
Lazarow said he knew of one brand that is owed over $3.5 million that would have to file for bankruptcy itself if Saks Global failed and paid vendors something like 5 to 10 cents on the dollar, as bankruptcy experts predict.
“Without that money, there’s no viability for the business,” he said of the brand. “If they’re going to get 10 cents [on the dollar], they’re going to walk away with half a million bucks. They don’t know how they’re going to survive.”
And even for brands that sell through Saks Global on consignment or have goods made, but not shipped, there are few places to turn to sell that inventory.
“Is Nordstrom’s going to take over luxury? It might. I think there’s an opportunity there,” Lazarow said. “Bloomingdale’s could go upstream. But again, they’re both trapped in that department store mindset. The players that really could take take this inventory — it’s going to ship too late, so you’re going to be a year out of place essentially. Nordstrom’s already done their buy.
“Losing Saks, as a vendor, that’s horrible,” he said.
Lazarow said there’s not much brands can do to get money owed now, but suggested that vendors could send a letter with the full amount they’re owed in an effort to get their claims addressed in a bankruptcy as soon as possible after secured creditors get paid.
While other retailers have gotten in trouble in the past, it’s very rare for bankruptcy to be in the cards so soon — just a year after the company sold $2.2 billion in bonds to buy Neiman Marcus.
“Saks is in a really, really dangerous position,” Lazarow said. “This is the kind of stuff that should have been determined prior to buying Neiman Marcus. Somebody should have sat there and said, ‘Look, these are the risks you take because if you get this leveraged [the financial pressures can be overwhelming]’ — but this is unusual, the speed at which this is happening.”
While many people see a Saks Global bankruptcy as a fait accompli, Baker is known as a kind of dealmaking magician who could still pull something out of his hat.
Richard Baker
Patrick Macleod/WWD
But each day, life for the retailer gets harder.
Industry sources say few if any brands are sending new shipments to the company, which already couldn’t stock up well enough to hold sales stable. And the retailer is believed to be in what is typically a 30-day grace period after missing its interest rate payment Dec. 30.
Attorney Bradford Sandler, co-chair of Pachulski Stang Ziehl & Jones’ creditors’ committee practice group, said it was more a matter of when, not if, Saks Global would file.
“If I had to bet, I would tell you in all likelihood, around the first week of February is my guess,” Sandler said.
Things could start to move things forward relatively quickly once a bankruptcy judge gets involved and Sandler said Saks Global would have two key things to fix.
“One is obviously to right-size their capital structure and the other is to fix their operations, because their inventory level is very, very low,” he said. “It’s low in variety. The brands are angry and frustrated at Saks for not only the lack of communication, but also the unkept promises.
“In order for Saks to survive, they need the brands,” he said. “Some of the brands need Saks as well, but I don’t think they need Saks as much as Saks needs the brands.”
If there were a bankruptcy filing, brands, landlords and other people owed money would form a creditor’s committee that would then dig back to see what happened at the company.
“They will have to look at the various transactions that Saks has entered into over the past couple of years, including the various liability management exchanges, as well as the Neiman Marcus purchase, which straddled the company with a tremendous amount of debt,” Sandler said. “There is some question as to whether Saks was actually insolvent or unreasonably capitalized after the Neiman Marcus purchase. Then the question becomes: Were there all the types of claims that arise out of that, including claims against the directors and officers?”
Saks Global’s directors and officers could “face a lot of risk,” he said. “It would be very fact-specific to understand what was promised to certain vendors, was there something said to all the vendors? Did the management know that it was not true at the time?”
Already, Metrick has been named as a plaintiff in the lawsuit filed by Gabriella Rossetti, which claimed “chronic nonpayment and retention of merchandise.”
“There are a lot of facts that you have to look into,” Sandler said. “What is, I think probably potentially a stronger claim is the acquisition of Neiman Marcus and how that left the company.”
