Saks Global files for bankruptcy after takeover leads to financial collapse | Retail industry
High-end department store group Saks Global filed for bankruptcy protection on Tuesday in one of the biggest retail collapses since the pandemic, just a year after a deal that brought Saks Fifth Avenue, Bergdorf Goodman and Neiman Marcus under the same roof.
The move has created uncertainty about the future of U.S. luxury fashion, but the retailer said early Wednesday that its stores will remain open for now after finalizing a $1.75 billion financing package and appointing a new CEO.
Former Neiman Marcus CEO Geoffroy van Raemdonck will replace Richard Baker, the architect of the acquisition strategy that plunged Saks Global into debt.
Saks Fifth Avenue, the retail arm of Saks Global, listed assets and liabilities of $1 billion to $10 billion, according to documents filed in U.S. bankruptcy court in Houston, Texas.
The court action aims to give the luxury retailer the opportunity to negotiate debt restructuring with creditors or sell itself to a new owner to avoid liquidation. Otherwise, the company may have to close.
Saks, a retailer long loved by the rich and famous from Gary Cooper to Grace Kelly, has fallen on hard times in the wake of the Covid outbreak, as competition from online outlets increased and brands began selling products more frequently through their own stores.
Saks Global said the new financing deal will provide an immediate cash flow of $1 billion through a debtor-in-possession facility from an investor group.
Reuters had previously reported that the loan was managed by Pentwater Capital Management in Naples, Florida, and Boston-based Bracebridge Capital.
According to the company, the $240 million in financing will be available through an asset-based loan provided by the company’s asset-based lenders.
The luxury retailer could access $500 million in financing from the investor group after it successfully emerges from bankruptcy protection, which is expected later this year, the company added.
Unsecured creditors include a number of luxury brands, including Chanel and Kering, which owns Gucci, for about $136 million and $60 million, respectively, the court filing said.
LVMH, the world’s largest luxury conglomerate, was listed as an unsecured creditor of $26 million. Saks Global estimates it has between 10,001 and 25,000 creditors in total.
Baker orchestrated a 2024 takeover of Neiman Marcus by Canada’s Hudson’s Bay Co, which has owned Saks since 2013, and then merged luxury assets in the U.S. to form Saks Global, bringing together three names that have defined American high fashion for more than a century.
The $2.7 billion deal was built on nearly $2 billion in debt financing and equity contributions from investors including Amazon, Salesforce and Authentic Brands.
Amazon and Authentic Brands are listed as equity investors in the court filing.
