Saks Global is racing toward the bankruptcy court exit — and the “new Saks” is coming into sharper focus.
The retailer, which filed for bankruptcy on Jan. 13, updated its plan of organization for the court this week, detailing the structure of the board, the scope of a litigation trust being set up with the court and more.
Talks are continuing over just how much money the company’s unsecured creditors, including vendors with past-due balances, will ultimately see.
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Saks Global went into bankruptcy owing $1.7 billion to unsecured creditors. Some payments have been made to vendors that were deemed “critical” to the business, but the rest is up in the air.
While still being negotiated, the plan detailed in the court filing has general unsecured claims being “canceled, released and extinguished without any distribution on account of such claims.”
The unsecured creditors committee — which includes big vendors like Chanel Inc., Kering and LVMH Moët Hennessy Louis Vuitton, but represents smaller vendors, too — has agreed to the reorganization plan.
Vendors’ best hope of getting any of their money back appears to be a litigation trust funded with $20 million from the retailer. The reorganization plan included a long list of causes of action the trust could look into, which could dredge up more information about how everything went wrong at the company.
The potential causes of action could touch on many topics, including:
- Saks Global’s $2.7 billion acquisition of Neiman Marcus Group “including the negotiation, structuring, financing, approval, execution and consummation” of the deal as well as “the decision-making in connection with entering into the transaction.”
- The retailer’s deal with Authentic Brands Group “including any claims for fraudulent transfer, fraud, unjust enrichment, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and similar theories.”
- And loans, advances, forgiveness and other transfer of value to executives.
The former equity owners of the company will also get wiped out.
But the lenders who ponied up money to get the company through the Chapter 11 process will literally get a seat or two at the boardroom table.
Saks Global’s new board will have seven members. That includes two appointed by Pentwater Capital Management, two by Bracebridge Capital, two by the majority holders of the company’s common units (but agreeable to Pentwater and Bracebridge) and the retailer’s chief executive officer, currently Geoffroy van Raemdonck.
Saks Global is going to seek confirmation of the plan before federal bankruptcy judge Alfredo Pérez on June 5.
The company could then exit Chapter 11 shortly afterward.
A spokesperson for Saks Global said: “We continue to make strong progress in our financial restructuring and are quickly approaching confirmation, with emergence to follow soon after. We look forward to completing the remaining milestones in this process and embarking on our plan to achieve sustainable, profitable growth.”
