#How is Amazon Involved with Saks Global Enterprises?
Amazon has recently taken a stand regarding the Chapter 11 bankruptcy filing of Saks Global Enterprises. The tech company is contesting the proposed $1.75 billion financing that Saks plans to secure, which poses a potential threat to Amazon's investment in the luxury retailer. In 2024, as part of Saks' acquisition of Neiman Marcus for $2.65 billion, Amazon contributed $475 million in preferred equity. This significant investment reinforces Amazon’s interest in maintaining a stake in Saks.
At the heart of the matter is a commercial agreement struck between Amazon and Saks, which involved Saks committing to sell its products on Amazon's platform. The agreement also included stipulations for many referral fees and guaranteed payments of at least $900 million to Amazon over the next eight years. However, as Saks faced financial distress—evident through missed budgets, high cash burn, and unpaid invoices—the company opted for bankruptcy protection on January 13.
#What Are the Implications of the Financing for Saks?
Saks has secured a notable $1.75 billion in financing commitments, which includes a $1 billion immediate cash infusion known as a debtor-in-possession (DIP) loan to fulfill its obligations to vendors and employees. An additional $500 million becomes accessible once the company emerges from bankruptcy.
Despite these efforts, Amazon opposes the bankruptcy financing package. The tech giant recently filed court documents arguing that the financing would leave Saks burdened with excessive debt while also hurting the interests of unsecured creditors. Furthermore, Amazon rejected consent for a critical segment of the loan. Nevertheless, Saks proceeded with the financing, asserting that these measures are essential to stabilize their operations and ensure the continuity of their retail outlets.