Saks Global received court approval for its bankruptcy restructuring plan on Friday, clearing the way for the luxury retailer to exit Chapter 11 with a smaller store footprint. The restructuring will eliminate nearly 75 percent of the company’s debt and hand control to senior lenders.
The company will emerge with 49 luxury retail locations, including 33 Neiman Marcus stores, 15 Saks Fifth Avenue stores, two Bergdorf Goodman stores, and 12 Saks Off Fifth stores. Prior to filing, Saks Global’s store count included 33 Saks Fifth Avenue, 35 Neiman Marcus, two Bergdorf Goodman, and 69 Off-Fifth.
U.S. Bankruptcy Judge Alfredo Perez approved the company’s Chapter 11 plan at a court hearing in Houston, TX, saying the company had done an “extraordinary” job in stabilizing its business after filing for bankruptcy in January.
“Securing approval of our Plan is an incredible achievement for Saks Global, and the broad-based support we have received from our capital partners, brand partners and other key stakeholders reflects confidence in our future,” stated Geoffroy van Raemdonck, chief executive officer, Saks Global. With our capital partners’ commitment and the dedication of our talented team, we are on track to emerge as a stronger, more focused company, poised for profitable and sustainable growth. I firmly believe in Saks Global’s enduring role as a leader in the luxury retail ecosystem, delivering exceptional experiences for customers and serving as the premier gateway to the U.S. luxury consumer for our brand partners. I am confident we are well-positioned to define the future of luxury retail.”
Brandy Richardson, chief financial officer, Saks Global, added, “With significantly reduced debt on the company’s balance sheet at emergence and having already achieved substantial cost savings through the optimization of our footprint, operations and organization, our business is well positioned for future success. We are grateful for the support of all of our stakeholders, including our capital partners and brand partners, and look forward to driving profitable growth as a stronger Saks Global, leveraging our distinct and differentiated assets.”
Saks Global expects to emerge from bankruptcy within weeks.
Under the plan, senior lenders will take control of Saks Global after providing $1 billion in new funding through the bankruptcy and pledging an additional $500 million upon the company’s exit from Chapter 11.
The company will reduce its funded debt to about $1.2 billion from $3.4 billion and will have an enterprise value of between $2.5 billion and $3.5 billion.
Junior creditors, who are owed about $1.5 billion collectively, agreed to set up a litigation trust with $20 million in initial funding to pursue lawsuits in hopes of recovering more money for creditors. The junior creditors would likely get no recovery without the litigation trust, according to court filings.
Saks Global filed for bankruptcy on January 13 after its merger with Neiman Marcus caused cash shortfalls that prevented it from reliably replenishing inventory at its stores and strained its relationship with key vendors.
Image courtesy Saks Global
