Saks Secures $1 Billion Bankruptcy Lifeline, but These Stores Are Still Closing

Federal judge approves a financing plan to lift Saks Global out of Chapter 11 proceedings, saving most, if not all, Saks Fifth Avenue and Neiman Marcus locations

BY KEVIN HAYNES, NEWS WRITER

Saks Global’s riches-to-rags story took a positive turn Friday when a federal bankruptcy court in Houston approved a plan that will provide $1 billion in immediate new financing to the illustrious luxury retailer. The entire reorganization plan is valued at $1.75 billion.

The decision by Judge Alfredo Perez was announced after the parent company of Saks Fifth Avenue and Neiman Marcus secured settlements with its high-end vendors, including Chanel and Dolce & Gabbana, who were owed millions of dollars when Saks filed for Chapter 11 bankruptcy protection last month.

The financing arrangement establishes a critical lifeline for the company whose roots date back to 1867, though it won’t reverse Saks’ plans to close dozens of stores by the end of the year.

The iconic retailer’s survival was far from assured when Saks revealed its intention to enter bankruptcy proceedings. The news worried suppliers, who feared Saks’ lenders would claim collateral rights on millions of dollars worth of designer clothing, couture handbags, and expensive jewelry.

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However, the court-sanctioned debtor-in-possession (DIP) deal gives vendors a lien on their goods, ensuring they will either receive sales proceeds or be able to reclaim their merchandise.

Nearly $600 million soon will be dispersed to clear up pre-existing vendor debts, including $330 million set to be released within the next two weeks. “As of today, we have more than 100 brands that have either executed or are coming close to executing trade agreements with the company,” said Saks attorney Debra Sinclair. “Our brand partners … are at the heart of our business and we’re generating great momentum with them.”

Saks owes $136 ‌million ‌to Chanel, $60 million to the Kering Group’s Gucci label, and $26 million to Louis Vuitton parent LVMH, according to court filings. Millions more are owed to other “critical vendors” and landlords.

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