Saks Global is racing the calendar. With vendors withholding goods, payroll and rent mounting, and a missed interest payment that drew a ratings downgrade this week, the luxury retail group is trying to line up as much as $1 billion in debtor-in-possession (DIP) financing to carry it through a potential Chapter 11 filing — and so far investors are largely saying no.
The ask is straightforward on paper: a short-term loan that would let Saks keep stores open, pay staff and buy inventory while negotiating a reorganization in bankruptcy court. In practice, lenders are skittish. DIP lenders do get priority in Chapter 11, but they don’t always get all their money back. Several potential financiers have declined to step in, people familiar with the talks told reporters, and only a limited number of investors have expressed interest.
How the company got here
This crisis is the fallout of aggressive dealmaking and a heavy debt load. In late 2024 Saks Global closed a roughly $2.7 billion acquisition of Neiman Marcus — a move meant to create a dominant luxury platform by folding in two storied names alongside Bergdorf Goodman. The expected payoff: hundreds of millions in cost synergies and stronger negotiating power with suppliers.
Instead, the integration has been rocky. Saks has struggled to hit promised efficiency targets and to steady merchandising flows. Suppliers, worried about late payments, curtailed shipments; that created inventory gaps that hurt sales. S&P Global moved the company’s issuer rating to “selective default” after a roughly $100 million interest payment went unpaid at year-end, and analysts point to an operating cash shortfall running into the hundreds of millions.
Why potential lenders are wary
There are practical reasons for lender caution. Distressed retail is a crowded, specialist space and many banks and asset managers won’t touch a story they see as structurally weak. Even specialists who do finance troubled retailers are mindful that DIP loans can still lose money if a reorganization fails or if asset values prove lower than expected.
For Saks, the stakes are more than balance-sheet numbers. Its Fifth Avenue flagship and other landmark stores carry real estate value, but monetizing those assets takes time and buyers — and may not bridge the immediate cash gap. Executives have sold some real estate recently, including a Neiman Marcus flagship in Beverly Hills, and the company has reportedly been in talks with liquidators about closing specific stores. Those measures can raise cash but often aren’t quick fixes.
Leadership and strategy under pressure
Executive changes have followed the deterioration: longtime floor leaders were replaced and Executive Chairman Richard Baker has taken a more direct role in running the company. Critics point to an emphasis on financial engineering over reinvestment in stock, stores and service — the fundamentals that have revived other department-store peers — and say the debt-laden tie-up with Neiman Marcus compounded the risk.
Saks had targeted roughly $600 million in annualized cost savings from the merger; according to analysts, those gains haven’t materialized at the pace or scale needed to offset the leverage. The result: revenue weakness (declines reported in recent periods), pressured margins and a sizeable free operating cash flow deficit.
The choices in front of Saks
If a DIP facility can be arranged, Chapter 11 would give Saks breathing room to try to reorganize, renegotiate leases and look for strategic buyers for parts of the business. Without that financing, the company could face Chapter 7 liquidation — a far more abrupt end that would likely shutter stores and accelerate asset sales under distressed conditions.
The picture is fluid. Some alternative asset managers and liquidators with experience in retail remain possible backers, but even they are weighing whether a reorganization is realistic and whether the underlying luxury market can recover quickly enough. For employees, suppliers and shoppers who still prize Saks as a luxury destination, the immediate worry is simpler and sharper: will the doors stay open through the winter season?
The answer may come in the next few weeks, when potential lenders and the company weigh risk against the outsized prestige — and precarious balance sheet — of a 159‑year‑old name in American retail.