Saks Global won court permission on Friday to circulate its Chapter 11 restructuring plan to creditors, clearing the procedural step that begins a formal creditor vote on a reorganization that would wipe out existing equity and vest control with its senior lenders.
At a hearing in Houston, Texas, U.S. Bankruptcy Judge Alfredo Perez approved the company's disclosure statement, a required document that outlines the terms and effects of the proposed plan and allows solicitation of creditor ballots. Under the court schedule, creditors must submit their votes by June 1.
The plan, as presented to the court, would materially reduce most of Saks Global's prepetition indebtedness and result in a scaled-down company on exit. Key elements identified in filings include efforts to restore relations with luxury-brand vendors, the closure of the company's off-price retail outlets, and the planned shutdown of more than half of its Saks Fifth Avenue locations.
Control under the proposal would shift to the company’s senior lenders. Those lenders have already provided $1.0 billion in new financing during the bankruptcy process and have committed an additional $500 million that would become available after the company emerges from Chapter 11, according to court documents.
To secure support from junior creditors, the company established a litigation trust seeded with $20 million in initial funding. The trust is intended to pursue lawsuits in hopes of recovering additional funds that would benefit creditors. Court filings indicate the group of junior creditors is collectively owed about $1.5 billion and, without the litigation trust, would receive no recovery under the proposed plan.
Saks Global initially filed for Chapter 11 protection on January 13, listing $3.4 billion in total debt. The approved disclosure statement does not itself confirm final acceptance of the plan by creditors; it allows the vote that will determine whether the restructuring proceeds as proposed.
With ballot submission mandated by the court for June 1, the next phase of the bankruptcy process is the tabulation of votes and, if accepted by the necessary creditor classes, the eventual confirmation hearing and implementation under the terms outlined in the plan.
What happens next - Creditors will vote on the plan, with ballots due by June 1. If the required majorities approve, the restructuring would reduce most prepetition debt, transfer company control to senior lenders, and implement store closures and vendor remediation measures as described in court filings.