Wills Layton

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

Willkie represented MyPower, a wholly-owned subsidiary of Mitsui & Co. and provider of industrial solutions for global climate change, in its sale of Solstice Power Technologies LLC to Perch Energy, a community solar servicer. On February 18, the sale of Solstice, a leading service provider specializing in customer acquisition and management for community solar development, was announced. Founded in 2015, Solstice connects households and small and large businesses to community solar farms that reduce their electric bills with no upfront cost or installation. Solstice also offers Community Benefit RECs, which aggregate corporate renewable energy purchases to fund new clean energy projects, workforce development, and environmental justice initiatives. Solstice's solutions align the needs of subscribers, asset owners, and corporate buyers to drive strong participation, community impact, long-term performance, and scalable growth in community solar. Perch and Solstice will combine their platforms to serve over 86 solar project owners in both mature and emerging community solar markets across the nation. The Willkie team was led by partners Archie Fallon and Ray LaSoya, and counsel Noah G. Goodman, and included associates Amirali Agha-Khan and Rachel Hudson.

Feb 23

1 min

Willkie represented Capstreet in its acquisition of TOPS Field Services, LLC, a nationwide provider of turbine maintenance and outage services. TOPS, an acronym for Turbine Overhaul Performance Specialists, an independent, multi-OEM service provider delivering full-spectrum turbine and generator maintenance capabilities for major independent power producers (IPPs), utilities, LNG and other industrial companies. Capstreet is a Houston-based private equity firm that invests in lower middle market business service companies. The Willkie team was led by partners Rosalind Kruse and Aaron Savella and included associates Sam Neece and Noor Halloum.

Feb 13

1 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