Why Saks Fifth Avenue could face Chapter 11 or liquidation

Having spent two years running a very large toy store, I learned a few things about dealing with vendors. Some vendors offered terms tailored to the fact that our business was heavily weighted to the fourth quarter.

Many offered merchandise all year that we had to pay for after the Christmas season.

Smaller vendors, however, usually had simple 30- or 60-day terms, and if we didn't pay them, they stopped shipping us merchandise.

"If you consistently pay suppliers late, frustrations could mount. Suppliers could eventually sever ties with your business, leaving a gap in your supply chain that cannot easily be remedied. That could lead to a reduced product or service line, disgruntled customers, and lower sales," American Express shared in a general piece on late payments, that was not specific to any retailer.

Pay enough vendors late, however, and word spreads, companies start demanding payment upfront, and the retailer has empty spots on its shelves, which limits its ability to generate needed cash. It's a recipe to run out of money, and that's what's happening at Saks Global, the parent company of the 158-year-old Saks Fifth Avenue chain.

Saks vendors keep suing

"Over the past two years, a growing number of companies have taken Saks Global and related entities to state court, alleging nonpayment for apparel, accessories, and jewelry that had been sold and delivered," The Fashion Law reported.

Across 2024 and 2025, lawsuits against Saks paint a familiar picture: Vendors delivered goods under purchase orders, supply agreements, or consignment deals, followed up repeatedly, and even tried negotiating payment extensions before turning to the courts.

Cases include, but are not limited to:

• Among the cases filed in 2025 are those filed by Jovani Fashion Ltd. and Catherine Regehr, Inc., both of which allege that Saks Global and related entities failed to pay more than $400,000 combined for women’s apparel sold and delivered between late 2024 and 2025. 
• Other suits target Saks Off 5th, including actions by International Trimmings & Labels Inc., which seeks $40,690 for goods sold pursuant to a 2023 invoice, and Criteo Corp., which alleges $251,953 in unpaid fees under digital advertising placement agreements.
• Additional complaints span winter accessories, garments, and jewelry, with claimed damages ranging from tens of thousands of dollars to more than half a million dollars.
  Source: The Fashion Law

How likely is a Saks Global Chapter 11 filing?

Bradford J. Sandler, partner and co-chair of the creditors’ committee practice group at Pachulski Stang Ziehl & Jones, shared some insight on Saks Global's situation via an email to TheStreet.

"A filing is very likely imminent. Saks has both operational and financial ills. Saks took on too much debt with the Neiman Marcus acquisition. The huge debt burden caused a downward spiral and a liquidity squeeze," he wrote.

That was something the chain was able to manage for a while.

"That liquidity squeeze made it difficult for Saks to pay its vendors. Saks tried to appease its vendors, who initially were willing to work with Saks, but the vendors, rightly so, are angry at Saks for unkept promises of payment, causing many of the brands to stop shipping," he added.

As noted earlier, a retailer can't operate without inventory because having limited items to sell means you never catch up on missed payments.

"With the vendors cutting back shipping of goods, inventory levels became bleak. Low inventory levels attract less customers, which means less revenue, which means less liquidity," he shared.

This downward spiral left Saks unable to make a recent $100 interest interest payment, according to Sandler.

"So with all of this and with Saks shopping for a $1 billion-plus debtor-in-possession facility, it isn’t hard to do the math: The low inventory, low liquidity, recent management change with Marc Metrick stepping down, and shopping for a large DIP facility all signal an accelerating move towards Chapter 11," he wrote.

Saks Global seeks $1 billion in financing

Saks has been seeking financing either to pay for a Chapter 11 bankruptcy or to avoid one. There are, however, some roadblocks to getting that money.

"Lenders to Saks Global Enterprises are grappling with a pressing question as it hurtles toward bankruptcy: How much — if anything at all — should they loan to the cash-strapped luxury retailer?" Bloomberg reported.

Not all the debt-holders agree on a plan.

"Some existing creditors want to back a so-called debtor-in-possession loan of $1 billion or more so Saks can keep the lights on at its stores during a Chapter 11 process, according to people with knowledge of the matter. Others, though, are weighing whether to throw in the towel, said the people, who asked not to be named because the discussions are private," Bloomberg shared.

The news website also made it clear what happens if the chain can't get the money needed.

More Saks coverage:

• After denial, the 158-year-old retail chain considers bankruptcy
• Upscale discount retailer closing stores, no bankruptcy
• Saks Global seeks to sell off major brand to raise cash

"A failure to win support for a sufficiently large financing package raises the risk that Saks could be forced to consider liquidating, rather than undergoing a court-supervised reorganization," Bloomberg reported.

Saks had previously denied that it was looking into a Chapter 11 bankruptcy filing in an email to TheStreet, sent before it was widely reported that the company was actively doing just that.

What would prevent a Chapter bankruptcy 11 filing?

Sandler made it clear that Saks Global might have options beyond a Chapter 11 filing.

"While a Chapter 11 seems imminent, there are likely some Hail Marys that could save Saks from filing for bankruptcy," he shared.

• An investor may be willing to provide Saks with sufficient liquidity to pay its lenders.
• A sovereign fund could consider buying some of Saks – perhaps Neiman Marcus or Bergdorf.
• Saks has valuable real estate, and the sale of the real estate could lead to a capital infusion, giving some liquidity relief.

"Again, we are talking Hail Marys. However, even if Saks is somehow able to make a Hail Mary effort to improve its capital structure, without fixing its operational issues, namely, its relationship with its critically important vendor community, even a capital infusion would likely only save Saks from filing in the near term," Sandler wrote.

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