Amazon Challenges Saks Global Bankruptcy Plan

The Chapter 11 bankruptcy filing of luxury retailer Saks Global has triggered a fierce legal battle with its high-profile investor, Amazon. Just hours after Saks Global filed for bankruptcy protection with a proposed $1.75 billion financing package, Amazon's legal team filed a motion in Texas federal court seeking to block the plan.

The e-commerce behemoth, which invested $475 million in preferred equity in December 2024, now claims its stake has become "presumptively worthless." Amazon is asking the court to reject the retailer's financing arrangements, arguing they would further diminish its chances of recovery while unfairly benefiting other creditors.

The relationship between Amazon and Saks Global deteriorated rapidly following the $2.7 billion acquisition of Neiman Marcus Group in late 2024. Amazon's investment was specifically conditioned on Saks entering into a commercial agreement to sell products through a dedicated "Saks at Amazon" storefront on the e-commerce platform.

Under the terms of that agreement, Saks guaranteed at least $900 million in payments to Amazon over eight years, plus referral fees for goods sold on the platform. However, Amazon's attorneys now allege that Saks "continuously failed to meet its budgets" and "burned through hundreds of millions of dollars in less than a year."

The luxury retailer also allegedly "ran up additional hundreds of millions of dollars in unpaid invoices owed to its retail partners," according to court documents filed Wednesday. This financial mismanagement has left Amazon's preferred equity position in a precarious state.

That equity investment is now presumptively worthless after Saks continuously failed to meet its budgets, burned through hundreds of millions of dollars in less than a year, and ran up additional hundreds of millions of dollars in unpaid invoices owed to its retail partners.

Amazon's legal challenge centers on the Chapter 11 financing plan that Saks Global proposed alongside its bankruptcy filing. The company argues that the proposed financing would "saddle" Saks with "billions of dollars of obligation for no material benefit," effectively using the value of Saks Global's flagship entities to prop up other debtors at the expense of creditors.

The e-commerce giant contends that this structure would improperly diminish the value available to Amazon and other creditors. In its motion, Amazon stated it "hopes" Saks will "resolve" its concerns but warned it may be forced to "seek more drastic remedies" if the situation isn't addressed.

These remedies could include the appointment of an examiner or a trustee to oversee the bankruptcy proceedings. The filing represents a significant escalation in what was initially positioned as a strategic investment partnership between the two retail giants.

• Amazon invested $475 million in preferred equity
• The investment was tied to a "Saks at Amazon" storefront agreement
• Saks guaranteed $900 million in payments over eight years
• The retailer allegedly burned through hundreds of millions in under a year

Despite Amazon's objections, the federal judge overseeing Saks' bankruptcy case has already granted preliminary approval for the retailer to access an initial round of its financing. The court hearing took place on Wednesday, coinciding with the bankruptcy filing and Amazon's legal response.

The judge's decision allows Saks to continue operations while the bankruptcy case proceeds, though the long-term financing structure remains contested. Amazon's challenge adds complexity to an already intricate bankruptcy proceeding involving one of America's most recognizable luxury retail brands.

The case is being heard in Texas federal bankruptcy court, where Saks Global filed its Chapter 11 petition. The legal proceedings will determine whether Amazon's concerns about the financing plan's impact on creditor recovery are valid and what remedies, if any, the court should impose.

The dispute highlights the complex financial entanglements that can arise from strategic investments in the retail sector. Amazon's $475 million investment was meant to create a synergistic relationship between its e-commerce platform and Saks' luxury retail expertise, but the bankruptcy has thrown those plans into disarray.

For Saks Global, the bankruptcy filing affects not just Amazon but also the future of its iconic brands including Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman. The company's ability to secure adequate financing will determine whether these luxury retailers can continue operations under new ownership or financial structure.

Amazon's challenge represents a significant test of how courts balance the interests of different creditor classes in complex bankruptcy cases. The outcome could set precedents for future disputes involving preferred equity investments in distressed retail companies.

The bankruptcy proceedings in Texas federal court will determine the fate of Saks Global's financing plan and Amazon's ability to recover its investment. Legal experts will be watching closely to see how the court weighs Amazon's concerns about creditor recovery against Saks' need for operational financing.

Representatives for both companies have not immediately responded to requests for comment, leaving the public to watch the legal filings for clues about the future of this high-profile retail partnership. The case underscores the risks inherent in strategic investments, even between major corporations with seemingly complementary business models.

As the proceedings continue, the outcome will likely influence how other investors approach similar partnerships in the luxury retail sector and what protections they seek when making substantial equity investments in companies facing financial headwinds.