Saks Global Nearing Bankruptcy Filing
After weeks of uncertainty, Saks Global may be on the brink of filing for bankruptcy as soon as Tuesday. However, there’s still confusion surrounding whether creditors will be able to claim the luxury items and valuable real estate associated with the brand, according to reports.
The owners of Saks Fifth Avenue, along with Neiman Marcus, Bergdorf Goodman, and Saks Off Fifth, are currently negotiating for over $1 billion in debtor-in-possession (DIP) financing from private equity firms to keep their operations running, as sources familiar with the situation have indicated.
Offers on the table reportedly include a potential $1.25 billion investment from Bracebridge Capital and Pentwater Capital, or a slightly larger $1.5 billion from Pimco. Notably, Pimco was involved when Neiman Marcus was merged into Saks in a major $2.6 billion deal back in 2024.
A twist in the situation arises from brand licensing firm ABG, which holds a 51% stake in the historical Saks name. Should the bankruptcy occur, ABG’s share is expected to rise to 77%, according to insiders.
As for Saks Global’s real estate holdings, including its notable flagship on Fifth Avenue, it remains uncertain if creditors will have access. Some of Saks Global’s 20 million square feet of real estate is thought to be securely held in subsidiaries separate from the bankruptcy, making it difficult to sell during proceedings, as noted in a report by RetailStat.
Richard Baker, the CEO of Saks Global, might lose his position once bankruptcy is declared. If Saks does not use its real estate as collateral in the Chapter 11 filing, experts suggest that retail inventory, store equipment, and minority stakes might be the main resources to back the DIP loan.
A source in real estate expressed concern, saying, “I’m puzzled over what creditors will receive if the real estate is divided post-bankruptcy.” There are currently two deals in play, but experts like Joseph Saracek, a restructuring attorney, acknowledged that complications arise because Saks cannot fully transfer its retail name.
Saracek also mentioned that while some real estate could potentially be used as collateral for a DIP loan, success in that area isn’t guaranteed.
Anxiety among Saks’ vendors is palpable. Some major brands like Chanel have reportedly started retracting their products from Saks stores, including a location in New Orleans.
One of Saracek’s clients reportedly owes a substantial $600,000 to Saks Fifth, reflecting the financial pressures at play. As it stands, any new buyers for Saks will likely have to negotiate a licensing deal with ABG in order to operate the stores.
ABG owns a diverse portfolio of brands, from Reebok to Brooks Brothers, and even iconic figures like Elvis Presley and Marilyn Monroe.
There’s been a notable shift with vendors pulling their merchandise from Saks Fifth Avenue, further complicating the retailer’s situation.
In 2024, a joint venture was formed with Saks Global and the Authentic Luxury Group, which generated a $150 million investment aimed at revitalizing the esteemed Saks and Neiman Marcus brands.
Meanwhile, both ABG and Saks Global have yet to provide statements regarding the ongoing developments.
