Amazon packaging and Saks Fifth Avenue bag.
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Amazon A federal judge is seeking to reject Saks Global’s bankruptcy financing plan, saying in court papers that the embattled department store “burned through hundreds of millions of dollars in less than a year” and failed to honor its agreement.
When Saks acquired Neiman Marcus for $2.7 billion in December 2024, Amazon invested $475 million in the venture because the retailer would start selling its products on Amazon’s website and the tech company would provide technology and logistics expertise.
Hours after Saks filed for Chapter 11 bankruptcy protection, Amazon’s lawyers said in a filing Wednesday that “its stock investments are now likely worthless.” “Saks continued to miss budgets, burning through hundreds of millions of dollars in less than a year, and racking up hundreds of millions more in unpaid bills to retail partners.”
As part of the deal, Saks has launched a branded Saks at Amazon storefront on the e-commerce company’s website, featuring an array of high-end fashion and beauty products. It also agreed to pay advertising fees for Saks-branded products sold on its platform, guaranteeing payments to Amazon of at least $900 million over eight years.
Amazon argued in its filing that Sachs’ bankruptcy financing plan would harm the company and other creditors by forcing Sachs to take on new debts it didn’t have before. This would also push Amazon further down the repayment rankings, reducing the amount it could potentially repay during the process, the e-commerce company said in its filing.
Amazon wrote that it “hopes” that Sachs will resolve its concerns, but if not, it may “seek more drastic remedies,” including the appointment of an examiner or receiver.
At a hearing Wednesday in U.S. Bankruptcy Court in Houston, Judge Alfred Perez allowed Saks to begin drawing on $1.75 billion in new bankruptcy loans after the company argued that without the bankruptcy loans, it would face immediate liquidation. He has not yet ruled on Amazon’s request.
Saks’ acquisition of Neiman Marcus brings in a number of new investors, including names from the technology industry. For Amazon, the deal guaranteed Saks a presence in its vast web store, where the company has sought to attract particularly big brands and expand its selection of luxury goods.
The deal with Saks also raises the possibility that Amazon will expand its investments in department store chains. Amazon is determined to further increase its brick-and-mortar presence, and has experimented with several concepts over the years, dropping some along the way.
The company has entered into similar investment agreements in the past. In 2022, Amazon acquired a 2% stake in GrubHub in exchange for the food delivery company adding benefits for Prime members. Amazon will increase its stake in the company to up to 18% in 2024.
Amazon declined to comment beyond what it said in its filing. Mr. Sacks did not respond to requests for comment.
major software company sales force also became a minority shareholder in Saks when it acquired Neiman Marcus, but its stake was smaller than Amazon’s. It is unclear whether he intends to oppose the bankruptcy plan as well.
