A major legal battle is underway between Amazon and Saks Global, with the e-commerce giant vowing to use “all available legal remedies” to recover $475 million it claims it is owed in the luxury retailer’s recently filed bankruptcy.
In a Wednesday hearing in US Bankruptcy Court in Houston, Amazon said it was burned by a soured web partnership with the swanky retailer — and objected to Saks Global’s proposal for a $1.75 billion debtor-in-possession, or DIP, loan to keep its operations going during a Chapter 11 proceeding.
Amazon accused Saks of “borrowing from Peter to pay Paul” by prioritizing other creditors’ claims over its own, saying Saks’ plan to reemerge from bankruptcy should be halted.
Amazon argued that the “immediate liquidation” of the company’s New York City flagship store on Fifth Avenue would be “more beneficial” to Saks Global creditors than the Seattle-based retailer .
Real estate mogul and former Saks Global chief executive, Richard Baker, recently invested $300 million to refurbish the flagship, adding a Rem Koolhaas-designed escalator connecting the ground and second floors. Baker stepped down as CEO on Tuesday, a day before Saks filed for bankruptcy.
That day, a Texas judge rejected Amazon’s argument as he released $400 million in restructuring funds to Saks Global.
Still, experts say the dispute could have legs — with the iconic luxury retailer’s future hanging in the balance.
“The battle royale between Saks and Amazon has only begun, with Amazon’s objection to the interim DIP financing the opening salvo,” David Wander, a partner in the bankruptcy group at Tarter Krinsky & Drogin told The Post. “Amazon’s objection raises real concerns for the present DIP financing.”
Saks Global declined to comment. Amazon declined to comment on the court’s decision.
Griping that Saks Global’s bankruptcy plan rendered its near half-billion-dollar stake in the company “worthless,” Amazon vowed to pursue claims of “management’s misconduct,” according to a Jan. 9 letter from Amazon’s legal counsel, Latham & Watkins, to Saks Global.
In 2024, Amazon took a 23% stake in the entity formed by Saks that acquired Neiman Marcus, taking on a major role in backing the $2.7 billion merger. In return, Saks Global agreed to sell high-end fashion on Amazon.com and pay the e-commerce giant at least $900 million in fees for Saks-branded goods sold on the platform over the next eight years.
The deal was secured by Saks Global’s prized Fifth Avenue real estate, according to Amazon’s filing. But the merged department stores struggled financially, falling behind on their vendor payments.
In August, Saks Global raised another $600 million in new funding from its existing bondholders, backstopping the investment with the flagship real estate. At the time, Amazon objected to the deal on the grounds that the funding diluted its investment.
The companies agreed to a “settlement” in which Amazon was given a “guarantee” for up to $475 million secured by the real estate.
“Saks cannot use the assets and value of [the] flagship … to fund other Saks entities for the benefit of those other entities’ creditors,” the Jan. 9 letter stated.
“Given Saks’ past financial and operational performance and present uncertainties, a liquidation of [the] flagship may very well be in the best interests of the creditors of the flagship,” the missive added.
Despite the court ruling allowing some of the DIP funds to be released this week, the fight is far from over, legal experts said.
“Amazon could take this to the district court to appeal the judge’s decision,” Joseph Sarachek, an attorney representing some 30 vendors who are owed money by Saks Global told The Post. “A final decision on the financing hasn’t happened. They could really fight this.”
Saks Global made a shrewd move to file for bankruptcy protection in Texas because “at the end of the day, debtors get whatever they want in Texas,” Sarachek added.
Despite Amazon’s suggestion that selling the Saks Fifth Avenue flagship would be the best outcome for Saks’ creditors, most fashion companies would disagree, according to industry experts.
“Everyone wants Saks to succeed — even people who have not been paid and were jerked around,” said Wander, the bankruptcy attorney. “The industry is very invested in these retail brands.”
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