Amazon.com Inc. (AMZN) tried to block emergency financing for Saks Global Enterprises during its Chapter 11 bankruptcy, but a federal judge wasn't having it. On Thursday, Judge Alfredo Perez approved a preliminary $400 million financing package for the struggling luxury retailer, brushing aside Amazon's concerns after a courtroom showdown.
Saks is actually seeking $1.75 billion in total to keep the lights on, but that will require additional approvals from the U.S. District and Bankruptcy Court for the Southern District of Texas. For now, though, they've got enough runway to keep operating.
Amazon Threatens "Drastic Remedies"
Amazon's investment in Saks has turned into a spectacular mess. The e-commerce giant filed an objection raising serious concerns about how Saks has managed its money, arguing the retailer had "burned through hundreds of millions of dollars in less than a year" and failed to live up to their agreement.
Here's the backstory: Amazon invested $475 million as part of Saks' $2.7 billion acquisition of Neiman Marcus back in December 2024. In exchange, Saks products would be sold on Amazon's platform, and Amazon would provide technology and logistics support. Now? "That equity investment is now presumptively worthless," Amazon argued in court.
Amazon said it hopes Saks will address its concerns but warned it could "seek more drastic remedies" if problems persist, including pushing for the appointment of an examiner or trustee to oversee the company.
The Luxury Liquidity Crisis
Saks' financial troubles have been building for a while. Lenders have been debating whether to inject more capital to keep the luxury department store empire afloat amid what insiders are calling a "luxury liquidity crisis."
The company tried everything to turn things around: cost-cutting, tech upgrades, renegotiating terms with vendors. But Saks still fell behind on payments and had to ask suppliers to extend past-due bills, a move that shocked many in the luxury retail sector.
The luxury retailer filed for bankruptcy late Tuesday with $3.4 billion in debt, citing cash shortfalls following its troubled merger with Neiman Marcus that left it unable to consistently restock inventory. Moody's had previously flagged the acquisition as highly risky, and they weren't wrong. Chief restructuring officer Mark Weinstein put it bluntly: the company would be "dead in the water" without new financing, which is intended to pay vendors and its roughly 17,000 employees.
