A judge has approved short-term financing for Saks Global Enterprises' Chapter 11 bankruptcy, turning back an initial challenge from Amazon.com Inc.
Amazon claimed the luxury retailer breached a deal to sell Saks products on its website and that its equity investment in the now bankrupt business is "presumptively worthless." Following a late-night court battle lasting 7.5 hours, Saks secured access to approximately $400 million in cash. The retailer must return in the coming weeks to seek final approval for the entire $1.75 billion financing package.
Amazon and other opposing creditors can try again to convince US Bankruptcy Judge Alfredo Perez to scrap or alter the debt deal. Saks advisers testified in Houston Wednesday night that the retailer risked liquidation without immediate funding.
In a court filing, Amazon argued the financing would saddle Saks with billions in new obligations and include terms harmful to Amazon and other unsecured creditors.
Amazon took a minority stake in Saks in 2024 as part of an agreement that helped facilitate Saks' $2.65 billion acquisition of Neiman Marcus. Amazon said it invested $475 million of preferred equity as part of that deal.
According to Amazon's Wednesday filing, the investment was contingent on an agreement for Saks to sell products on Amazon's platform, including launching "Saks on Amazon." In return, Saks agreed to pay a referral fee and guaranteed at least $900 million in payments to Amazon over eight years.
"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," Amazon alleged in its filing.
The company's chief restructuring officer, Mark Weinsten, testified Wednesday that Saks desperately needed additional financing to keep paying vendors and covering payroll and other expenses.
Without access to that funding, Weinsten said, "we'll be dead in the water." The retailer sought court permission for an initial $400 million draw, with remaining amounts available later in the Chapter 11 case.
A representative for Amazon declined to comment, while Saks did not immediately respond to requests for comment.
Days before Saks filed Chapter 11, Amazon said it would oppose the bankruptcy financing, according to a Jan. 9 letter made public Wednesday. Amazon claimed Saks needs its consent for a key part of the loan but that Amazon refused to give consent.
Instead, Saks moved forward with financing from a group of existing lenders, an arrangement the retailer said would strengthen its business. The company said in a Wednesday statement that stores under all its brands were open.