Through Saks Global’s year of turmoil, many vendors struggled to be heard — especially smaller designers trying to hold on to a must-have account and get their money back.
Although the hopes that they’ll ever be paid more than pennies on the dollar evaporated when the retailer filed for bankruptcy last month, apparel brands and other creditors now have a collective voice in the Chapter 11 process.
Last week, the court appointed 11 creditors to the Official Committee of Unsecured Creditors.
As is usually the case, they are among those with the most at stake in the bankruptcy.
The list of committee members reads like a who’s who of fashion companies that were left holding the bag one way or another. It includes:
- Amazon.com — which owns 23.2 percent of the retailer’s equity and was promised $900 million in referral payments over eight years.
- Chanel Inc. — the largest unsecured creditor with a $136 million claim.
- Pension Benefit Guaranty Corp.
- Brookfield Properties Retail Inc.
- Rosen-X — a $41 million unsecured claim.
- Kering Americas Inc. — Kering S.A. has a total unsecured claim of $60 million.
- LVMH Moët Hennessy Louis Vuitton — a $26 million unsecured claim.
- Ermenegildo Zegna — a $26 million unsecured claim.
- Kellermeyer Bergensons Services
- Local 1102 RWDSU
- Computershare Trust Company — trustee for Saks’ 11 percent Senior Secured Notes due 2029.
The committee is responsible for advocating on behalf of all the unsecured creditors — but it’s the secured creditors like the banks and the bondholders that have more leverage when it comes to getting paid by the court.
Meanwhile, the retailer is starting to use the process to reorganize its operations. The Saks Off 5th website is going to be liquidated or potentially sold and the vast majority of the off-pricer’s stores are going to be shuttered.
Big questions remain — including how many of the company’s 70 department stores will shutter — but other details are being worked out now.
Reuters reported that Saks Global plans to end its partnership with Amazon, which has hosted a Saks shop since last spring.
The Amazon agreement is among the contracts Saks Global asked the court for permission to reject last month. That process is continuing.
For now, it’s business as usual at the Saks on Amazon storefront.
A spokesperson for the web giant said, “Beyond the Saks experience, the Amazon Luxury store continues to offer a wide selection of high-end designer styles, and we’re adding more luxury brands regularly.”
Saks did not immediately respond to a request for comment.
While both Saks and Amazon once held big aspirations for the bricks to clicks connection, and the web giant was expecting big payments for referrals, the relationship has broken down.
After Saks Global filed, a lawyer for Amazon attempted to delay the financing meant to see the retailer through bankruptcy, claiming collateral it was promised was being used to secure the new debt.
But the judge said to delay would be to liquidate the chain and so he allowed the financing.
Just before the bankruptcy filing, Amazon sent a letter to Saks Global saying that: “Amazon reserves its rights to pursue all claims arising from the company’s and its management’s misconduct related to the LLC Agreement [between the two sides], in addition to claims arising from the board and management’s conduct in the last year that has led to the degradation of significant value and left the company in such a precarious financial position.”
