Amazon Criticizes Saks Investment Agreement, Claims Its Shares Have ‘No Value’

Amazon Disputes Saks' Bankruptcy Strategy

Amazon.com Inc. is contesting Saks Global Enterprises' recent Chapter 11 bankruptcy filing, asserting that Saks violated an agreement involving the sale of its luxury goods on Amazon's platform. Amazon also claims that its equity investment in Saks, now facing bankruptcy, is likely to have lost all value.

According to court documents submitted late Wednesday, Amazon is objecting to Saks' plan to secure up to $1.75 billion in new funding to support its bankruptcy proceedings. Amazon argues that this financing would burden Saks with significant new debt and contains provisions that could negatively impact Amazon and other unsecured creditors.

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Earlier in 2024, Amazon acquired a minority interest in Saks as part of a deal that enabled Saks to purchase Neiman Marcus for $2.65 billion. As part of this arrangement, Amazon invested $475 million in preferred equity in Saks.

The agreement also required Saks to launch a dedicated storefront on Amazon, called "Saks on Amazon," and to pay Amazon referral fees, with a minimum commitment of $900 million in payments over eight years, according to Amazon's recent court filing.

Amazon alleges that Saks consistently failed to meet its financial targets, spent hundreds of millions within a year, and accumulated substantial unpaid bills to its retail partners.

Mark Weinsten, Saks' chief restructuring officer, testified that the company urgently needs new funding to continue paying suppliers, employees, and other expenses.

Weinsten warned that without this financial support, the company would be unable to continue operating. Saks is seeking court approval to access an initial $400 million from the proposed financing, with additional funds to be made available as the bankruptcy case progresses.

Amazon declined to comment on the matter, while Saks did not immediately respond to requests for a statement. A bankruptcy judge in Texas was set to review Saks' request to begin using the financing during a hearing on Wednesday evening.

Just days before Saks filed for bankruptcy, Amazon indicated in a letter dated January 9 that it would oppose the proposed financing, arguing that Saks requires Amazon's approval for a key part of the loan—a consent Amazon refused to provide.

Saks Pursues Alternative Funding

Despite Amazon's objections, Saks proceeded with a financing deal from a group of existing lenders, which the company claims will help stabilize its operations. Saks stated on Wednesday that all its stores remain open under its various brands.