Saks Global, parent of high-end department store chain Saks Fifth Avenue, is weighing Chapter 11 bankruptcy as a last resort, Bloomberg News reported on Monday, citing people familiar with the matter.
The company, facing limited options ahead of a more than $100 million debt payment due at the end of this month, is exploring ways to boost cash, including raising emergency funds or selling assets, the report said.
“We are exploring all potential paths to secure a strong and stable future for Saks Global,” a Saks Global spokesperson said, following the report.
Some Saks lenders have recently held confidential talks to assess the company’s cash needs, focusing on a potential debtor-in-possession loan, a form of bankruptcy funding, Bloomberg said.
In September, a Saks Global spokesperson told Reuters that the company was looking to sell a minority stake in luxury retailer Bergdorf Goodman to help reduce debt.
Saks Global has also been facing challenges in lifting demand in the US at a time when rising inflationary pressures and a soft labor market have pressured spending on non-essentials including luxury items in the US
The company was created in July last year by Hudson’s Bay Company (HBC) after its $2.65 billion acquisition of department store chain Neiman Marcus. It combined Saks Fifth Avenue, Neiman Marcus and other luxury retail and real estate assets, in a move to compete with department store operators such as Nordstrom, Bloomingdale’s and Macy’s.
During Neiman Marcus’ buyout, HBC financed the deal with funds from shareholders and debt, including $1.15 billion from Apollo Global Management. It also secured $2 billion in debt financing from a syndicate of Wall Street banks.
