Report: Saks Global final wins court approval for $1B bankruptcy loan
Saks Global has taken a big step in its bankruptcy process.
A U.S. bankruptcy judge on Friday gave final approval to Saks Global's debtor-in-possession bankruptcy financing, which provides $1 billion in new funding to the company. Approval came after the luxury retailer reached deals over pricing disputes with brand vendors and other key creditors.
Saks, which filed for bankruptcy in January with $3.14 billion in debt, had received pushback on its bankruptcy financing from brands such as Chanel, Dolce & Gabbana and LVMH, reported Reuters, along with landlords and Amazon, which had partnered with Saks on an online sales platform. But the retailer resolved those concerns before the court hearing at which U.S. Bankruptcy Judge Alfredo Perez approved the financing.
Saks, which values the overall bankruptcy financing package at $1.75 billion, has said it needs the money to repair vendor relationships and buy time to renegotiate its debt. Saks previously received court approval to draw on the initial part of the loan.
Benjamin Butterfield, an attorney representing court-appointed committee of Saks' junior creditors, said in court that nearly $600 million of the new financing will be used to make catch-up payments to vendors who provided goods to Saks before it went bankrupt, reported Reuters.
"We want the company to be on solid footing going forward and this facility does that,” he said, according to a WWD report. "It’s also going a long way … to restoring relationships with vendors. From the committee’s perspective, we think vendors should feel very comfortable doing business with this company going forward."
Under the direction of new CEO Geoffroy van Raemdonck, Saks is working to reinforce its luxury positioning. In January, the company said that it would close the majority (57) of its Saks Off 5th outlet stores and all five Last Call stores as it looks to sharpen its focus on full-price selling and luxury retail across its portfolio. (Last Call is the clearance division of Neiman Marcus.)
Earlier this month, it launched the initial phase of its footprint “optimization” review as part of its restructuring efforts. The company is closing eight Saks Fifth Avenue stores — including its outpost at mega-center American Dream in New Jersey — and one Neiman Marcus location.
