Allyson B. Smith

Luxury retailer Saks Global secured a Texas bankruptcy judge's approval Friday on more than $1.2 billion in Chapter 11 financing after reaching a deal with unsecured creditors, funds that Saks will use to support its reorganization efforts. At a hearing, U.S. Bankruptcy Judge Alfredo R. Perez gave final approval to Saks' debtor-in-possession financing motion, freeing up roughly $1.24 billion in fresh funding. The motion was largely uncontested on Friday after Saks agreed to add protections for vendors as part of the DIP package. "I appreciate everyone's efforts, and I will enter the order," Judge Perez said. Saks' DIP financing comprises three debt facilities that total $5.85 billion. Of that sum, up to roughly $2.1 billion is prepetition debt being rolled up into the DIP. The $1.24 billion in new money financing will be used to fund most of a $1.75 billion intercompany loan. Saks' DIP lenders will also provide $500 million in exit financing as part of that package. Saks' unsecured creditors and vendors expressed support for the DIP at Friday's hearing after the debtor made what they called "material concessions." Saks agreed that the new money and rollup DIP loans would be subordinated to the debtor's bills to concession and consignment vendors for post-bankruptcy sales. The debtor also said it would give vendors rights to goods held by Saks during the bankruptcy case and ensure that stub rent is paid to landlords on time. "DIPs are hard-fought. This was no exception," said Benjamin Butterfield of Morrison Foerster LLP, counsel to the unsecured creditors committee. "But I think from the committee's perspective, we've absolutely gotten to the right place." Judge Perez also on Friday approved a bid by SO5 Digital, the online retailer for Saks Off 5th, to continue using cash that serves as lender collateral. Saks Global filed for bankruptcy Jan. 14 with about $3.4 billion in funded debt after struggling to deal with the debt it took on to purchase Neiman Marcus more than a year ago. This month, Judge Perez approved Saks' plan to begin closing procedures at nine of its flagship stores and continue the liquidation of its off-price e-commerce inventory as part of an effort to focus more on its luxury offerings. Saks Global is represented by Jennifer J. Hardy, Debra M. Sinclair, Robin Spigel, Allyson B. Smith, Betsy L. Feldman, Jessica D. Graber and Ryan Blaine Bennett of Willkie Farr & Gallagher LLP and Kelli Stephenson Norfleet, Kenric D. Kattner, Arsalan Muhammad, Kourtney P. Lyda and David Trausch of Haynes Boone. The SO5 debtors are represented by Jarrod B. Martin, Michael K. Riordan, Raneen I. Abdelghani, Asiya Khan and James Bailey of Bradley Arant Boult Cummings LLP. The official committee of unsecured creditors is represented by Ian R. Phillips, Seth Van Aalten and Justin R. Alberto of Cole Schotz PC and Lorenzo Marinuzzi, Doug Mannal, Benjamin Butterfield and Raff Ferraioli of Morrison Foerster LLP. The case is In re: Saks Global Enterprises LLC et al., case number 4:26-bk-90103, in the U.S. Bankruptcy Court for the Southern District of Texas.

Feb 20

2 min

A Texas bankruptcy judge on Friday indicated that he will approve Saks Global's emergency motion to close the majority of its Saks Off 5th retail locations and its remaining Neiman Marcus Last Call stores, but not until Monday at the earliest. Although the debtor sought to begin going out of business sales as soon as Saturday, U.S. Bankruptcy Judge Alfredo R. Perez said it could wait until next week to give landlords, vendors, and other creditors time to review the motion, which was filed Thursday. If Saks Global can reach agreement on a proposed order, Judge Perez said, he will sign it after 5 p.m. Monday, and if there isn't an agreement, he will take it up at a status conference Tuesday. "I'm going to approve the order," he said, calling it a routine motion that is within the debtor's business judgment. "I think we just need to go through, allow the committee to look at it and allow there to be discussions over the weekend." The official committee of unsecured creditors was appointed Tuesday and includes creditors such as Amazon.com, Chanel Inc., and luxury goods conglomerate LVMH. On Thursday, Saks Global said the closures of its cut-price Off 5th stores would help the retailer sharpen its focus on the luxury market. The company will shutter about 57 Saks Off 5th stores and its five remaining Last Call locations. Saks will keep open 12 of its Off 5th stores, which will mainly sell residual inventory from Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman. It will cease buying merchandise directly for Saks Off 5th, it said. "The exigency of these store closings is very palpable for these global debtors," debtor attorney Betsy L. Feldman of Willkie Farr & Gallagher LLP said at Friday's hearing. "The store closing sales really do need to commence right now." Asked when sale signage would go up, Feldman said it was scheduled to start Saturday. The emergency motion faced pushback Friday from several parties, including landlords and vendors, who said that although they aren't necessarily opposed to the store closings, they want time to review the proposed order and reach agreements with the debtor on any issues they have. Jeri Leigh Miller of Sidley Austin LLP, an attorney for Simon Property Group, said the landlord's objection was to the expedited timeline. "They could have been working with the landlords for the past two and a half weeks so that this could have been filed on an agreed upon basis," she said. "Unfortunately, that's not what happened. We just learned about it when it got filed yesterday." Simon Property Group is ready to negotiate a side letter agreement, Miller said, and "we're confident we'll get one done, but we don't want to be punished and deprived of due process by an exigency of their own making." Judge Perez agreed to a brief delay, saying he wants "to be sensitive to the committee and the landlords." At a hearing Jan. 23, Judge Perez gave SO5 Digital, the e-retailer for Saks Off 5th, interim permission to hire GA Retail Consultants to launch liquidation sales of its online affiliates' inventory. Saks Global filed for bankruptcy protection Jan. 14 with about $3.4 billion in funded debt after struggling to deal with the debt it took on to purchase Neiman Marcus more than a year ago. It entered Chapter 11 with about $1.75 billion in committed financing from its creditors. Judge Perez on Jan. 14 allowed Saks to access about $500 million in funding as part of an interim order authorizing its debtor-in-possession financing. Saks Global is represented by Jennifer J. Hardy, Debra M. Sinclair, Robin Spigel, Allyson B. Smith, Betsy L. Feldman, Jessica D. Graber, and Ryan Blaine Bennett of Willkie Farr & Gallagher LLP and Kelli Stephenson Norfleet, Kenric D. Kattner, Arsalan Muhammad, Kourtney P. Lyda, and David Trausch of Haynes Boone. Simon Property Group LP is represented by Duston K. McFaul, Jeri Leigh Miller, and Maegan Quejada of Sidley Austin LLP. The case is In re: Saks Global Enterprises LLC et al., case number 4:26-bk-90103, in the U.S. Bankruptcy Court for the Southern District of Texas.

Jan 30

3 min

Bankrupt luxury retailer Saks Global received court approval Friday in Texas to begin closing procedures at nine of its flagship stores and continue the liquidation of its off-price e-commerce inventory as part of its Chapter 11 plan to rationalize the company's operating footprint. During a virtual hearing, U.S. Bankruptcy Judge Alfredo R. Perez permitted Saks to enter into liquidation consulting agreements with GA Retail Solutions for eight Saks 5th Avenue locations and a single Neiman Marcus store that will see going-out-of-business sales conducted before they are closed for good. Counsel for Saks, Betsy L. Feldman of Willkie Farr & Gallagher LLP, told the court the debtors decided to break off this motion from the previous bids for similar relief to preserve the image of the business to the public. "Why not seek approval in a single motion a couple of weeks ago?" Feldman said. "The rationale for closing the off-price stores in our last motions was very different from the rationale for closing these nine full-price stores." "We needed time. It was very important from a brand perspective," she added, explaining that Saks did not want media reports that could be interpreted as the entire enterprise going out of business. The relief will be largely similar to that earlier approved for the debtors' Saks Off 5th e-commerce platform, with employee bonuses being reserved for final approval of the motion, she said. Saks will have the ability to add more store locations to the closing list by providing seven days' notice, Feldman told the court. Judge Perez granted interim approval for the motion and scheduled a final hearing for March 2. Also at the hearing, an attorney representing Saks Off 5th, Michael K. Riordan of Bradley Arant Boult Cummings LLP, said after the court provided interim approval of a liquidation sale consulting agreement with GA Retail Solutions LLC last month, the digital debtors engaged in negotiations with unsecured creditors that enabled the final order to be entered without objection Friday. The key changes made to the final order following talks with the official committee of unsecured creditors included adding consultation and noticing rights to the committee for any changes proposed to the consulting agreement going forward, and provide the group with the opportunity to object to any of those changes, Riordan said. Judge Perez also granted final approval to the main debtor's store closing consulting agreement with GA Retail Solutions covering 34 Saks Off 5th physical locations and the last five of its Neiman Marcus Last Call stores. Following an initial approval to enter into the agreements, Feldman said the closing sales have been going smoothly. Final approval came with permission to pay bonuses to hundreds of employees working at the closing locations, as well as Saks' corporate levels, totaling about $5 million for 800 workers. Store-level employees will also be eligible for incentive-based bonuses tied to sale targets for each store, Feldman added. Saks Global filed for bankruptcy Jan. 14 with about $3.4 billion in funded debt after struggling to deal with the debt it took on to purchase Neiman Marcus more than a year ago. It entered Chapter 11 with about $1.75 billion in committed financing from its creditors. Judge Perez on Jan. 14 allowed Saks to access about $500 million in funding as part of an interim order authorizing its debtor-in-possession financing. Saks Global is represented by Jennifer J. Hardy, Debra M. Sinclair, Robin Spigel, Allyson B. Smith, Betsy L. Feldman, Jessica D. Graber and Ryan Blaine Bennett of Willkie Farr & Gallagher LLP and Kelli Stephenson Norfleet, Kenric D. Kattner, Arsalan Muhammad, Kourtney P. Lyda and David Trausch of Haynes Boone. The SO5 debtors are represented by Jarrod B. Martin, Michael K. Riordan, Raneen I. Abdelghani, Asiya Khan and James Bailey of Bradley Arant Boult Cummings LLP. The official committee of unsecured creditors is represented by Ian R. Phillips, Seth Van Aalten and Justin R. Alberto of Cole Schotz PC and Lorenzo Marinuzzi, Doug Mannal, Theresa Foudy, Raff Ferraioli and Miranda K. Russell of Morrison Foerster LLP. The case is In re: Saks Global Enterprises LLC et al., case number 4:26-bk-90103, in the U.S. Bankruptcy Court for the Southern District of Texas.

Feb 13

3 min

Retail landlord Simon Properties and luxury retailer Saks Global on Monday wrangled over the wording of a 2024 investment agreement as they asked a Texas bankruptcy judge to determine the fate of the leases of two Saks locations. Counsel for the parties made their closing arguments to U.S. Bankruptcy Judge Alfredo R. Perez after three days of hearings on Simon's request for a ruling that it can terminate the leases without the notice periods in the leases themselves. The parties are disputing whether a letter agreement Simon and Saks entered into when Simon invested $100 million in Saks in 2024 allows Simon to terminate the leases of a Saks location in Woodbury, New York, and a Neiman Marcus store in Palo Alto, California, effective Jan. 8, six days before Saks declared bankruptcy and a stay on contract terminations went into effect. Both parties acknowledged that the agreement granted Simon the right to terminate the Palo Alto lease and one other lease for "failure to perform" on either lease and that Saks had overdue lease payments, but they disagreed on whether the letter overrode notice of default and cure period provisions in the leases that would have given Saks 30 days from its Jan. 8 notice to make up the payments. At Monday's hearing, Simon counsel Robert Velevis argued the default provisions in the leases were not relevant, saying the agreement specifically allowed termination for "failure to perform" and not "default." "The letter agreement does not give a cure period," it said. Saks counsel Allyson Smith argued the letter agreement doesn't define "failure to perform" but the leases do, and that definition includes cure rights. The sole purpose of the clause in the letter agreement was to give Simon the right to terminate the leases for a default on a different lease, she argued. She also argued calling a default on the leases was a break with the parties' standard relationship. She said Simon had always accepted late payments, for example when Saks disputed a particular charge and delayed payment until the dispute was reconciled. "There has always been an amount technically outstanding," she said. Velevis argued this only meant that Simon had the right to terminate the leases anytime after the agreement was signed, and only invoked it now for "its own reasons." Smith claimed Simon learned of Saks' plans to file and "manufactured a default" in order to seize the leases and prevent Saks from selling them in its Chapter 11. Judge Perez reserved decisions on the issue. Simon Property Group is represented by Duston K. McFaul, Robert S. Velevis, Jeri Leigh Miller and Maegan Quejada of Sidley Austin LLP. Saks is represented by Kelli S. Norfleet, Kenric D. Kattner, Arsalan Muhammad, Kourtney P. Lyda and David Trausch of Haynes Boone and Debra M. Sinclair, Robin Spigel, Allyson B. Smith, Betsy L. Feldman, Jessica D. Graber, Jennifer J. Hardy, Ryan B. Bennett, Stuart R. Lombardi and Nathaniel G. Ward of Willkie Farr & Gallagher LLP. The case is In re: Saks Global Enterprises LLC et al., case number 4:26-bk-90103, in the U.S. Bankruptcy Court for the Southern District of Texas.

Mar 2

2 min

Saks Global said on Tuesday it plans to close eight Saks Fifth Avenue stores and one Neiman Marcus location in the U.S., as it looks to boost its business through a Chapter 11 restructuring. In a motion filed in Texas bankruptcy court, the luxury retailer asked for leave to quickly shutter the nine locations, conduct store closing sales, and lay off over 600 employees. The closures and liquidation sales, which are projected to last from Feb. 20 through April 30, are part of a larger strategy to go all in on Saks' highest-end business and back away from discount sales, according to the motion. "The global debtors believe that these targeted store closings will allow the global debtors to better serve their luxury customers, strengthen brand partner relationships and drive full-price selling to enable sustainable, profitable growth," the motion read. Since Saks Global and related entities filed for bankruptcy in January, the retailer has been looking to close stores for its discount business lines, including most Saks Off 5th stores and all five remaining Neiman Marcus Last Call locations. The soon-to-be-closing Saks Fifth Avenue stores are located in New Orleans; Philadelphia; Phoenix; Tulsa, Okla.; and elsewhere, while the Neiman Marcus store is in Boston. Saks Global plans to continue closing Saks Fifth Avenue and Neiman Marcus stores, which are part of its core non-discounted business lines, in order to shed locations with low sales or costly leases and focus on "profitable locations with the highest growth potential," the retailer said in a press release on Tuesday. "Opportunities within the luxury market remain strong, and Saks Global is primed to play a distinct, enduring role within the industry for many years to come," Geoffroy van Raemdonck, the CEO of Saks Global, said in a statement on Tuesday. In the motion, Saks Global requested approval for $3.5 million in severance for 615 employees at the affected stores, averaging about $5,690 per employee, with the actual sums paid out amounting to "no more than approximately $105,000 for any individual," according to the motion. The debtor requested that the court waive state and local laws governing liquidation sales. It also asked for a waiver of so-called "fast pay" laws requiring laid-off employees to be paid all money owed to them promptly within a few days of termination, saying its payroll department may be unable to meet certain legal deadlines due to the number of employees being terminated at one time. Saks Global is also closing most of the locations where it offers personal stylist services as a standalone business in cities without a Saks Fifth Avenue store, saying that business line has become largely redundant since its acquisition of Neiman Marcus. The personal styling business will remain in Indianapolis and Honolulu, and a soon-to-open location in West Palm Beach, Florida, is still projected to open, according to an announcement. Saks Global is also folding home goods retailer Horchow into the home goods section of Neiman Marcus, according to the press release. It filed for bankruptcy protection on Jan. 14 with about $3.4 billion in funded debt after struggling to deal with the debt it took on to purchase Neiman Marcus more than a year ago. Saks Global is represented by Nathaniel G. Ward, Jennifer J. Hardy, Debra M. Sinclair, Robin Spigel, Allyson B. Smith, Betsy L. Feldman, Jessica D. Graber, and Ryan Blaine Bennett of Willkie Farr & Gallagher LLP and Kelli Stephenson Norfleet, Kenric D. Kattner, Arsalan Muhammad, Kourtney P. Lyda, and David Trausch of Haynes Boone. The case is In re: Saks Global Enterprises LLC et al., case number 4:26-bk-90103, in the U.S. Bankruptcy Court for the Southern District of Texas.

Feb 10

3 min