A creditors committee assembled to represent junior claimants in Saks Global's bankruptcy now features heavyweight retail and luxury names, giving those stakeholders a more prominent role in the retailer's restructuring discussions.
The Office of the U.S. Trustee notified the U.S. bankruptcy court in Houston that the 10-member committee will include ecommerce giant Amazon as well as luxury brands LVMH and Chanel. Also named to the committee are Ermenegildo Zegna NV and Kering Americas; landlord Brookfield Properties Retail; a labor union representing Saks employees; a logistics services supplier; and the Pension Benefit Guaranty Corporation.
Under bankruptcy procedures, this committee speaks on behalf of all junior creditors, not solely its individual members, and its professional fees will be charged to Saks during the case. The formation of the committee was disclosed to the Houston court on Tuesday by the U.S. Trustee, which oversees bankruptcy processes for the Department of Justice.
Although vendor claims typically sit low on the priority list for repayment in U.S. bankruptcy proceedings, the presence of prominent luxury-brand vendors on the committee underscores their practical leverage. Saks relies on these brands to stock merchandise and to sustain the customer relationships that underpin its business. The retailer has sought court permission to make $337.4 million in catch-up payments to vendors it has classified as "critical" to its restructuring.
Saks' court filings detail the amounts owed to several of those vendors: $136 million to Chanel, $60 million to Gucci maker Kering and $26 million to Louis Vuitton parent LVMH. The company filed for bankruptcy on January 13, citing $3.4 billion in debt after a merger with Neiman Marcus that left the company short of cash and unable to reliably replenish inventory at its stores.
Amazon has already registered its displeasure with aspects of Saks' bankruptcy process by opposing the retailer's requested bankruptcy financing. The ecommerce company has sought to preserve a $475 million equity investment and protect revenue tied to a "Saks on Amazon" ecommerce partnership agreement. Amazon's appointment to the creditors committee could increase its ability to contest terms of financing or other restructuring actions as the case progresses.
The U.S. Trustee typically aims to assemble a committee that reflects a range of creditor types - vendors, landlords and individuals among them - who might otherwise lack the resources to argue their positions in a complex bankruptcy. The newly formed committee in the Saks case houses an array of constituencies, from luxury suppliers to a major landlord and a federal pension insurer, reflecting the broad set of stakeholders with direct commercial or financial exposure to Saks as it reorganizes.
Saks did not immediately comment on the committee formation when contacted on Wednesday.
Context and implications
The committee will have a formal role in negotiations and in presenting a unified position for junior creditors. Its legal and advisory expenses will be borne by Saks, and the committee members collectively could exert influence over decisions tied to vendor payments, inventory replenishment and the renegotiation of commercial arrangements that are central to the retailer's operations.