Saks Resolves Simon Property Issues as Bankruptcy Exit Nears

Saks Global took additional steps towards exiting bankruptcy last week.

One agreement saw the luxury retailer settle a dispute with Simon Property Group over the fate of two store locations, Bloomberg reported. The large mall owner was seeking to take over a Saks space in Palo Alto, California and a Saks Off Fifth store in Woodbury, New York.

Simon alleged the retailer failed to pay rent and related costs at the two stores prior to its January bankruptcy filing. Details of the settlement have yet to be disclosed publicly, so the fate of the pair of stores remains uncertain.

The agreement will be submitted to the judge overseeing the Saks Chapter 11 case in the next few days.

In a separate deal, the court also approved an up to $500 million financing package from creditors to shore up Saks’ liquidity. Under the deal, investors will either be able to buy preferred equity or loan cash to the company, either of which would help the retailer secure further inventory for its stores.

The restructuring support agreement emerged at the beginning of the month, the Wall Street Journal reported. The financing commitment is a key component of a goal to emerge from bankruptcy by the summer.

The bankruptcy came just over a year after Saks acquired Neiman Marcus in a $2.7 billion deal intended to create a luxury retail heavyweight with the scale to cut costs and stabilize vendor relationships.

The fate of stores under the Saks umbrella — which includes Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman and the discount Saks Off Fifth brand — has been steeped in uncertainty for months.

In late January, the company announced it would be closing 62 stores in a matter of weeks, all but five of which were Saks Off 5th locations; the other five were Neiman Marcus discount outlets known as Last Call.

Since then, it’s been revealed that the company plans to close a dozen Saks Fifth Avenue stores by the end of next month on top of eight previously disclosed closures, leaving Saks FIfth Avenue with 13 stores remaining nationwide.

— Holden Walter-Warner