Amazon.com Inc. and luxury groups including LVMH and Chanel Ltd. will serve on the official committee of unsecured creditors in the bankruptcy of Saks Global Enterprises, positioning them to influence how the retailer restructures.
The 10-member panel also includes a labor union representing Saks store workers, Italian fashion house Ermenegildo Zegna NV, Kering Americas and Brookfield Properties Retail, according to a court filing Tuesday. Saks owes Chanel about $136 million, Kering nearly $60 million and LVMH roughly $26 million, its bankruptcy petitions show.
Amazon has challenged Saks’ Chapter 11 financing after investing $475 million in preferred equity as part of a broader transaction that helped fund Saks’ acquisition of Neiman Marcus. The e-commerce company has alleged Saks missed budget targets and “burned through hundreds of millions of dollars” over the past year.
Creditors’ committees, which are appointed by the US Justice Department in most large bankruptcies, give vendors, landlords and other unsecured creditors a formal role in the case. Saks is responsible for covering the legal fees and expenses of advisers to the committee, a standard feature of Chapter 11 proceedings.
Saks didn’t immediately return a Wednesday message seeking comment.
Saks has said in court papers that delayed payments to brands have strained vendor relationships and limited its ability to secure sufficient seasonal inventory, as suppliers have become more reluctant to ship goods.
The retailer has also argued that Chapter 11 will help stabilise those relationships by providing access to new financing. Saks said it expects to draw on $1.75 billion in bankruptcy financing, which it says will allow the company to strengthen ties with key brands.
The case is Saks Global Enterprises LLC, number 26-90103, in the US Bankruptcy Court for the Southern District of Texas.
By Jonathan Randles
Saks Global: When Bankruptcy Is Your Best-Case Scenario…
The retailer’s Chapter 11 filing — and $1.75 billion in new financing to keep operating while it restructures — came as a relief to many in the industry. But keeping the doors open is a low bar to clear; there are still unanswered questions about the luxury department store model’s future.
