Saks Global Enterprises is hoping to stop a shutdown of its Palo Alto location by Simon Property Group.
Simon is looking to seize control of the Saks Fifth Avenue store at the Stanford Shopping Center in Palo Alto, claiming Saks didn’t pay rent and other costs before the company went into Chapter 11 bankruptcy protection last month, Bloomberg reported. In addition to the Palo Alto outpost, Simon is also looking to shutter a Saks Off Fifth discount store at an outlet mall in Woodbury, New York.
On Monday, Saks responded in a court filing claiming that its agreements regarding the store allow the firm time to pay back any rent it allegedly owes, as well as any potential missed payments related to taxes, utilities and maintenance in common areas. Saks also believes it has the additional protection of bankruptcy to keep Simon from disrupting its business operations. Saks senior noteholders and a committee representing the retailer’s unsecured creditors are supporting the company’s efforts in stopping Simon’s request.
The move to stop Simon’s Palo Alto shutdown comes after Saks announced earlier this month that it was closing more than 10 percent of its full-price stores across the U.S. as it works to restructure in Chapter 11 bankruptcy. Nearly all of its Saks Off Fifth discount stores have been closed.
“Simon has decided that it can make more money on certain of the leases by re-letting them at higher rates,” Saks said in its court filing. In forcing Saks to shut down two currently operating stores, Simon would hurt its business and prevent “any possibility of selling these valuable leases” to raise money that would benefit all company creditors.
Simon argues that Saks was required to vacate its Palo Alto store by Jan. 18, days after Saks Global sought bankruptcy protection. The retail property owner claims Saks Global owes at least $5.7 million tied to the two sites.
The unsecured creditors committee said Saks’ leases weren’t properly terminated by Simon before the bankruptcy filing. Simon believes it still should have the power to take back the Palo Alto store despite the Chapter 11 filing and Saks’ bankruptcy stay because the lease was terminated shortly before the retailer sought court protection.
Saks and Simon worked in partnership prior to Saks’ bankruptcy filing last month. In December 2024, Simon invested $100 million for Saks Global’s acquisition of Neiman Marcus. Saks Global is Simon’s sixth-largest anchor tenant by leased square footage nationally.
Simon’s request will be reviewed by a Texas bankruptcy judge overseeing Saks’ Chapter 11 case at a to-be-determined date.— Chris Malone Méndez
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