By Rania V. Sedhom
The Saks Global (“Saks”) bankruptcy is underway.
Secured and unsecured creditors alike are filing their proofs of claim with hopes of seeing some of their debt paid. As in all bankruptcies, some vendors will fare better than others.
For those watching closely, the Amazon – Saks Global relationship is most volatile.
Luxury partnership gone south
As part of the bankruptcy petition, Saks wants to exit its Amazon partnership.
The Luxury Stores at Amazon platform provide consumers with the ability to purchase authentic luxury products from Amazon.
As part of Amazon’s luxury store growth plan, it entered into a relationship with Saks – a $475 million relationship. Amazon paid hundreds of millions to Saks to help it acquire Neiman Marcus Group in December 2024.
Saks offered Amazon a guarantee of at least $900 million in referral fees for products sold on Amazon, over an 8-year period. The Saks Fifth Avenue storefront on Amazon was established less than one year ago.
Now, the $475 million investment and approximately 23 percent share maintain little to no value. Amazon is, therefore, fighting back and requesting that the federal bankruptcy judge reject Saks’ plan.
Creditors’ cut
As part of its filings, Amazon stated as follows: “That equity investment is now presumptively worthless after Saks continuously failed to meet its budgets, burned through hundreds of millions of dollars in less than a year, and ran up additional hundreds of millions of dollars in unpaid invoices owed to its retail partners.”
It is uncertain what the outcome will be, but if you are familiar with bankruptcy proceedings, you’d know that if Saks were to liquidate, Amazon and other creditors would receive more money.
Saks is seeking nearly $2 billion of additional debt as part of its restructuring. The increased debt will most assuredly come at the expense of their creditors.
Future in flux
Bankruptcy, like all cases, has phases. As part of the initial phase, the bankruptcy court granted the company approval at a court hearing on Wednesday to tap into an initial round of its financing.
This initial approval does not mean that Saks’ entire plan will be approved, but it means that it survives another day.
Amazon will not likely sit idly and take more severe measures. Many smaller brands are waiting patiently in hopes of keeping their own businesses alive while waiting for a payout, regardless of how small.
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