Saks Global took a big step forward in its bankruptcy case on Friday when a federal judge gave the final sign-off on the debtor-in-possession financing meant to see it through the Chapter 11 process and back to solvency. 

The “first-day hearing” last month was a dramatic affair, with Amazon trying to hold up the financing over a commercial agreement that it said was backed by the retailer’s famed Fifth Avenue flagship. Amazon invested $475 million into Saks when it bought Neiman Marcus Group in late 2024, but has since soured on the relationship and has threatened to sue the retailer if warranted.  

But the final sign-off was relatively drama-free and had lawyers for both the retailer and key vendors praising the process and the compromises made along the way on the $1.75 billion DIP package, provided by the company’s bondholders.

With the signature of Houston-based Judge Alfredo Pérez, the DIP package unleashed $330 million in funds that are expected to go to certain vendors with past-due bills within two weeks. Like the company’s initial appearance in court, Friday’s “second-day hearing” was held virtually. 

Debra Sinclair, the Saks Global attorney from Willkie Farr & Gallagher, stressed the importance of the retailer’s relationship with its brand partners — a group that was hit hard as the company fell behind on payments and ultimately filed for Chapter 11 protection.

“As of today, we have more than 100 brands that have either executed or are coming close to executing trade agreements with the company,” Sinclair said. “Our brand partners … are at the heart of our business and we’re generating great momentum with them.”

She said Saks Global has also refocused “on their core commitment to luxury retail” over the past month and is ahead of schedule in closing 57 Saks Off 5th stores. The company is also shuttering nine full-line stores and has saved money by rejecting contracts while in bankruptcy.

“The company has been outperforming the DIP budget in terms of top-line revenue and merchandise receipts and we’ve also been working actively with our lenders,” Sinclair said. “We’re on track to meet our DIP milestones with respect to the business plan and a Chapter 11 plan. So it’s been a very productive first month of the case and we plan to keep making significant progress with our creditors and other stakeholders. 

“We have come a very long way since the first-day hearing,” she said. “Amazon is no longer pursuing an objection to the DIP and we’ve resolved almost all of the formal objections and informal comments that we’ve received to date.”

The final DIP order represents weeks of back-and-forth between Saks Global and the creditors committee, made up of parties left hanging by the bankruptcy, including Amazon, Chanel Inc. (owed $136 million), Kering ($60 million), LVMH Moët Hennessy Louis Vuitton ($26 million) and more. 

The committee represents all the unsecured creditors, a group that includes many of fashion’s top brands. They come behind secured lenders, including banks and bondholders, in the bankruptcy process. 

While vendors are among the last in line in bankruptcy, the DIP negotiations carved out some additional protections.

Sinclair summarized it this way: “With respect to any goods that are sold in the post petition, the new language gives our brand partners a lien on those proceeds of those goods that is senior to the DIP obligations, other than the [asset-backed loan] obligations and it’s senior to the pre-petition obligation, again, other than the ABL obligations.”

Additionally, she said that any concession merchandise that hasn’t been sold remains the property of the vendor. 

Saks is working to establish its critical vendor list, which will include brands that get special treatment in court.

“The company has agreements with several vendors including some of its largest vendors and is continuing to negotiate agreements with vendors generally regarding payment of pre-petition and go-forward concession consignment and wholesale goods,” Sinclair said. 

Benjamin Butterfield, the Morrison & Foerster attorney representing unsecured creditors at the hearing, described the DIP agreement as “hard-fought.” 

“This facility provides over a billion dollars in new liquidity to the company,” Butterfield said. “Nearly $600 million of that is slated to go out to clean up pre-petition claims on the vendors [including the $330 million set to go out over the next two weeks].” 

Those payments on debts accrued before Saks Global went bankrupt on Jan. 14 will go to critical vendors as well as concessions and consignment vendors.

“We want the company to be on solid footing going forward and this facility does that. It’s also going a long way … to restoring relationships with vendors,” he said. 

“From the committee’s perspective, we think vendors should feel very comfortable doing business with this company going forward,” Butterfield said. 

That should be music to the ears of Saks Global’s chief executive officer Geoffroy van Raemdonck, who’s racing to get the company back into shape so it can exit bankruptcy and forge a new identity in luxury retailing. 

But there’s still a long way from here to there, with many vendors still grumbling over past-due bills that will now be paid down only pennies on the dollar. And more store closures are expected to be in the offing.