By Dietrich Knauth
Jan 28 (Reuters) – Ecommerce giant Amazon and high-end brands LVMH and Chanel have been appointed to Saks Global’s newly formed creditors committee, which will give them a stronger voice in the luxury retailer’s bankruptcy restructuring.
The 10-member committee also includes luxury fashion companies Ermenegildo Zegna NV and Kering Americas; landlord Brookfield Properties Retail; a labor union representing Saks employees; a logistics services supplier; and the Pension Benefit Guaranty Corporation. The committee speaks as the official voice of all junior creditors, not just its own members, and its legal fees will be charged to Saks during the bankruptcy case.
The Office of the U.S. Trustee, which serves as the U.S. Department of Justice’s bankruptcy watchdog, notified the U.S. bankruptcy court in Houston overseeing Saks’ bankruptcy case about the new committee on Tuesday.
The luxury brand vendors will play a pivotal role in Saks’ restructuring, despite the fact that U.S. bankruptcy courts would typically treat Saks’ debt to vendors as relatively low in priority for repayment. Because Saks depends on those luxury brands to stock its stores and maintain customer loyalty, Saks has sought permission to make $337.4 million in catch-up payments to vendors that it deems “critical” to its restructuring.
Saks owes $136 million to Chanel, $60 million to Gucci maker Kering and $26 million to Louis Vuitton parent LVMH, according to its court filings.
Saks filed for bankruptcy on January 13 with $3.4 billion in debt, after its ill-fated merger with Neiman Marcus caused cash shortfalls that prevented Saks from reliably replenishing inventory at its stores.
Amazon has already spoken up in opposition to Saks’ bankruptcy financing, seeking to protect a $475 million equity investment and revenue from a “Saks on Amazon” ecommerce partnership agreement. Amazon’s appointment to the creditors committee could give it more leverage to push back against Saks in later stages of its bankruptcy.
The U.S. Trustee typically seeks to appoint a diverse committee of creditors who can speak up for lower-ranked creditors, like vendors, landlords, or individuals, who do not have the resources or leverage to effectively advocate for themselves in a large and complex bankruptcy case.
Saks didn’t immediately respond to requests for comment on Wednesday.
(Reporting by Dietrich Knauth in New York, Editing by Alexia Garamfalvi and Diane Craft)
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