Saks Fifth Avenue Faces Bankruptcy Risk

Saks Global, the owner of Saks Fifth Avenue, is facing a potential Chapter 11 bankruptcy filing. This follows a difficult year involving missed payments to vendors and a heavy debt load.

The company's financial struggles intensified after the $2.7 billion acquisition of Neiman Marcus Group at the end of 2024. The deal was financed by $2.2 billion in junk bonds, leaving the company strapped for cash.

Vendors have paused shipments to Saks stores, and guarantor Hilldun Corp. has stopped backing shipments. Saks recently named a new CEO as it explores paths to secure a stable future.

At the end of 2024, Saks Global finalized its $2.7 billion acquisition of Neiman Marcus Group. The move was intended to solve the retailer's cash flow problems and create a luxury behemoth backed by technology from Salesforce and Amazon.

However, the execution was messy. The deal was financed by $2.2 billion worth of junk bonds, which carry high interest rates. S&P Global described this debt load as unsustainable.

The financial strain led to immediate consequences:

• Multiple rounds of layoffs starting early in the year
• Cash flow shortages that impacted vendor payments
• A nine-figure interest payment in July that triggered debt restructuring

According to Gary Wassner, CEO of Hilldun Corp., "It was touch-and-go up until the Neiman Marcus deal occurred. Everyone thought that would solve the cash flow problems."

Vendor relations deteriorated rapidly in early 2025. On Valentine's Day, then-CEO Marc Metrick informed vendors that overdue bills would be paid in installments stretched over 12 months, with payments not beginning until summer.

Many vendors, some owed hundreds of millions of dollars, were left in a difficult position. One vendor owed six figures described the situation as "agony."

The payment schedule was not met in July, further damaging trust. By August and October, brands began taking legal action:

• Sunday Riley threatened to sue if payments were not made
• Jovani Fashion filed a lawsuit claiming Saks owed $295,651

These delays have resulted in a critical inventory shortage. S&P analysts noted Saks had a "less-than-adequate in-stock inventory position."

In early December, Hilldun Corp. announced it would no longer back shipments to Saks. Hilldun acts as a guarantor or insurer for brands and represents approximately 140 brands that sell to Saks, supplying at least $500 million worth of product annually.

Previously, Hilldun worked with major names like Tommy Hilfiger and Marc Jacobs. The halt in backing means brands are pausing shipments to Saks stores.

Gary Wassner warned of the immediate consequences for the retail calendar: "They must do something very quickly to rectify this situation in the market, or they will not have a spring season. Every order is on hold until Saks clarifies to the industry what they intend to do."

As 2025 ended, reports indicated Saks missed a nine-figure interest payment. The company has not denied the possibility of bankruptcy. A Saks Global spokesperson stated, "Together with our key financial stakeholders, we are exploring all potential paths to secure a strong and stable future."

On Friday, Saks named a new CEO to cap the tumultuous year. The company is considering a court-supervised reorganization.

Mark Cohen, former CEO of Sears Canada, expressed skepticism about the retailer's future, stating, "They aren't going to have goods on the shelf, certainly not new goods. This is a house of cards."

While Saks owns valuable real estate and holds cultural cache, the road ahead is difficult. The company recently sold the land beneath its Beverly Hills location and may close unproductive stores.