A U.S. bankruptcy judge has dismissed Amazon.com Inc.‘s (NASDAQ:AMZN) attempt to block a proposed financing deal to aid Saks Global Enterprises during its Chapter 11 bankruptcy.
On Thursday, Judge Alfredo Perez approved a preliminary $400 million financing package for Saks following a courtroom battle between the retailer and several creditors, including Amazon, reported Reuters.
Saks is seeking $1.75 billion to continue operations, but will need further approvals from the U.S. District & Bankruptcy Court for the Southern District of Texas.
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Amazon’s investment in Saks has been a point of contention. The e-commerce giant had filed an objection with its concerns about the retailer’s financial management, arguing that Saks had “burned through hundreds of millions of dollars in less than a year” and failed to meet their agreement.
Amazon invested $475 million as part of Saks’ $2.7 billion acquisition of Neiman Marcus in December 2024, in exchange for selling Saks products on Amazon’s platform and providing technology and logistics support. “That equity investment is now presumptively worthless,” argued Amazon.
Amazon said it hopes Saks will address its concerns but warned it could “seek more drastic remedies”, such as the appointment of an examiner or trustee, if the issues remain unresolved.
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Saks’ financial woes have been a subject of discussion for some time. Lenders have been debating whether to inject more capital to keep the luxury department store empire afloat amid what is described as a “luxury liquidity crisis.”
Despite efforts to revive the business through cost-cutting, tech upgrades, and renegotiating terms with vendors, Saks faced further challenges as it fell behind on payments and asked suppliers to extend past-due bills, a move that surprised 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. Notably, Moody’s had flagged this acquisition as highly risky. Chief restructuring officer Mark Weinstein said the company would be “dead in the water” without new financing, which is intended to pay vendors and its roughly 17,000 employees.
