Saks Secures $400 Million Initial Rescue Approval from Court

Saks gets more funding just hours after filing for bankruptcy. Judge Alfredo Perez has approved the $400 million financing at a hearing in Houston, saying the injection offers the U.S. luxury department store company to stabilize the business and restructure debt.

The $400 million injection approved by the judge corresponds to the first tranche of a total financing package of $1.75 billion for Saks, according to Reuters.

The head of Saks’ restructuring, Mark Weinstein, has stated that the injection will be used to pay suppliers and the company’s 17,000 employees. The company’s lawyer, Debra Sinclair, has insisted that the stores will remain open despite the situation.

The capital injection will be used to pay suppliers and employees of the company, which does not plan to close its stores

Sinclair has assured that the demand exists, but that it has not been able to be met due to the department store group’s inability to purchase sufficient inventory in recent weeks. This has caused customers to start spending gift cards in the face of the uncertainty generated by the increasingly empty store windows.

Saks filed for bankruptcy last Tuesday, in what was one of the largest retail bankruptcies in the United States. The historic company is immersed in this situation only a year after completing the purchase of the Neiman Marcus operator for $2.7 billion, with the aim of creating an even larger group of department stores.

The judicial process deployed in the last few days has had the objective of offering the company room to restructure the debt with its creditors, who are demanding a total of $345 million. Sources familiar with the process put the total debt at $10 billion.

Saks’ creditors include Chanel as the main creditor, which is claiming an amount of 136 million dollars. Other creditors include Kering, which is claiming $59.9 million; Richemont, $30 million; LVMH, $25 million; Christian Louboutin, which is demanding payment of $21 million; Giorgio Armani, $10.79 million; Ermenegilion, which is demanding payment of $10.79 million; and Ermenegilion, which is claiming $21 million.The Estée Lauder, $15.9 million; G-III Apparel Group, $16.7 million; Burberry, $9.5 million; and Dolce&Gabbana, $9.1 million.The list includes only one Spanish group, Puig.

In this situation, Saks has experienced a real dance of managers in recent days. The crisis took its CEO, Mark Metrick, who stepped back at the beginning of the month after more than thirty years to be replaced by Richard Baker, who came from the real estate sector. However, Baker stepped aside just before the company filed for bankruptcy, being replaced by Geoffroy van Raemdonck, former CEO of Neiman Marcus.

In July, the company announced first quarter results for the year where it reported a net loss of $232 million, up from a net loss of $184 million in the first quarter of 2024, excluding Neiman Marcus.