TLDR
- Amazon fights Saks’ $1.75B financing in court to protect its investment.
- Saks gets short-term financing approval but faces Amazon’s opposition.
- Amazon claims Saks’ bankruptcy deal hurts creditors and its own stake.
- Saks seeks $1.75B debt deal to avoid liquidation, Amazon contests terms.
- Amazon challenges Saks’ Chapter 11 financing, arguing new debt harms creditors.
Amazon (AMZN) stock price increased by 1.13%, reaching $239.38 after a sharp rise around noon. The price remained stable as of the latest data. However, the e-commerce giant is entangled in a legal battle regarding Saks Global Enterprises’ Chapter 11 bankruptcy proceedings. Amazon challenges a proposed $1.75 billion financing deal that Saks intends to use to keep its business afloat.
Amazon’s Legal Challenge to Saks’ Financing Proposal
Amazon argues that Saks Global Enterprises breached its agreement with the company, particularly concerning a deal to sell Saks products on Amazon’s platform. The online retailer also claims its $475 million investment in Saks is now “presumptively worthless.” A judge recently approved short-term financing for Saks, allowing the company to access $400 million in immediate funding. However, the approval is conditional, and Saks must return to court for final approval of the full financing package.
The legal dispute stems from Amazon’s 2024 investment in Saks, which was part of the retailer’s acquisition of Neiman Marcus. In exchange for Amazon’s minority stake, Saks agreed to launch “Saks on Amazon” and guarantee at least $900 million in payments over eight years. Amazon alleges that Saks failed to meet its obligations under the deal, including budget targets and the payment of outstanding invoices. The e-commerce giant argues that the proposed financing package would harm its position and that of other unsecured creditors.
The Future of Saks and Its Debt Deal
While Saks desperately needs the funds to stay in business, the company’s financial troubles have raised concerns. Saks’ chief restructuring officer, Mark Weinsten, testified that the retailer would face dire consequences without the financing. He stated that without the $400 million draw, the retailer would “be dead in the water,” highlighting the urgency of securing the full $1.75 billion package.
Amazon and other creditors who oppose the financing will continue to argue against it in court. The deal would add billions of dollars in new debt to Saks’ balance sheet, and the terms could further disadvantage unsecured creditors like Amazon. Saks, on the other hand, insists that the financing is necessary to prevent liquidation and that the funding would strengthen its operations.
In the coming weeks, Saks will return to court to seek approval for the full financing. The outcome of this legal battle could significantly impact both the retailer and its creditors, including Amazon, which seeks to protect its investment in Saks. The case highlights ongoing tensions in the retail sector, where large companies like Amazon are increasingly involved in the financial restructuring of troubled businesses.
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