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And now, on to the main event…

The saga of Saks Global, which filed for Chapter 11 bankruptcy protection late Tuesday, is really just beginning. On Thursday, Gary Wassner, the C.E.O. of factoring firm Hilldun, sent partner brands a message advising them not to ship product yet, despite the fact that a Texas judge had approved the $1.75 billion in DIP (“debtor-in-possession”) financing amid pushback from Amazon, which poured nearly $500 million into Saks Global at the beginning of 2025. “I realize that it is difficult to not be anxious, but for your own protection, we all must wait until the situation is stabilized and on the right path, and until your future payments for new merchandise are secured,” Wassner wrote. “This is a large bankruptcy with many creditors, both secured and unsecured, who are all equally entitled to have a voice in the process.”

Of course, it’s unclear whether new C.E.O. Geoffroy van Raemdonck can make Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman into viable businesses. I’ll be documenting his efforts to do just that in the coming months. Today, I wanted to share a conversation with Puck’s Bill Cohan, author of the indispensable Dry Powder newsletter, who was the first to observe that Saks’s debt had begun trading unfavorably on the bond market. (Disclosure: Last year, Saks sued Puck over our coverage of its financial condition.) Since early last year, Bill and I have exchanged observations about the state of the company, its potential financing options, and what might come next now that a restructuring is in process. Today, we’re going to dig into the mechanics of the filing and the next steps for the company as it enters restructuring. As usual, the following has been edited for length and clarity.

Lauren: Bill, did any of this shake out differently than you thought it would?

Bill: As a former banker, there are certain signs that indicate a company is in potential distress. You alerted the world to the Valentine’s Day Massacre, a.k.a. the decision to stretch payables from 30 days to 90 days, and to tell vendors who were already owed money that they would not get paid until the summer; I saw those as huge red flags. As a retailer, you don’t stretch payables unless you’re having financial difficulties. And the fact that they did that, literally two months after the Saks Global deal closed, signaled to me that there was trouble ahead. Then it was just a matter of watching how this junk bond traded in the market: The secondary market price traded down and the yield traded up—all signs of financial difficulty.

A MESSAGE FROM OUR SPONSOR

Inspired by the relaxed elegance and spirit of Portofino, MALO has quietly perfected the art of Italian knitwear since 1972—elevating cashmere with design and soul. Our independent Tuscan house reemerges with renewed purpose: refined, enduring, and crafted with intention. Made in Italy, offering luxury without noise, only softness, simplicity, and beauty.

Feeling over trend, MALO is sublime comfort for modern lives.

MALO. Worn by the wind. Kissed by the sun.

Lauren: The department store model has been in decline since the 1970s, essentially, when specialty retail and catalogues started to take market share. As a consumer, and as a person who covers the fashion industry, I understand the value of these things from a discovery perspective and marketing and surprise and delight and all that. But on a mass consumer level, they don’t really work anymore. Why do these mergers keep getting financed?

Bill: Most investors have very short memories, and they’re basically optimists. Hope springs eternal. When you make an investment, you buy it because you think the stock is going to go up. And there’s a whole apparatus on Wall Street designed to hype stocks and bonds.

And what is Saks Global? It’s Saks Fifth Avenue and Neiman Marcus and Bergdorf Goodman. These are luxury brand leaders, household names that have been around forever. So of course there’s risk, but you’re in the business of taking calculated risks, and you’re in the business of putting money to work. So it’s a combination of all those things, which is the only explanation for why you would ever have been part of putting new money into Saks in August of last year.

Lauren: Every time this happens, I assume that there’s going to be a real wake-up call for the fashion industry, because it can’t operate the way it used to operate, which is on a wholesale model. If you look at the top 10 brands that are owed money by Saks Global, Chanel doesn’t need to be in Saks stores, Kering doesn’t need to be in Saks stores, LVMH doesn’t need to be in Saks stores. Richemont, maybe a little bit, Brunello Cucinelli, maybe a little.

Bill: Then why do they do it?

Lauren: Because of tradition, and because that’s the way things are done. Department stores are still distribution and awareness channels. LVMH and Chanel have had shop-in-shops there for years. Having so many stand-alone luxury stores is a pretty new phenomenon. It used to be that they were run by franchises in different countries, and they’ve only globalized since the early 2000s, with Bernard Arnault and the Pinaults. You saw Chanel close some Neiman Marcus stores before this—that was a signal to Saks Global that “If you don’t pay us back, we’re going to leave.”

And if this is going to work, you need LVMH and Chanel and Kering to be in the stores. A lot of them think they’re getting 100 percent on the dollar.

Bill: I think the chances of that are very, very low. There are creditors competing over this carcass, and it’s going to be a battle royale in bankruptcy. They filed without a prepackaged plan, so this is a so-called freefall bankruptcy—there’s basically a dead body on the floor, and they’re going to fight over this thing.

Part of what happened in August was creditor-on-creditor violence. A group of creditors who provided the additional financing, as crazy as that was, put themselves in a position senior to other creditors in this capital structure. And they are going to perfect on that seniority and that security that they bargained for in August to the detriment of other creditors—including these vendors, who are now general unsecured creditors. There’s going to be a fight, and it could go on for a long time.

Lauren: This filing, you said it’s a freefall bankruptcy. Is that unusual?

Bill: Normally, they would have already met with their creditors and tried to resolve this before filing Chapter 11, so that it would be a prepackaged bankruptcy. It would basically be a matter of ratification by the court.

Obviously, they got their act together to get the DIP financing, which is essential. And they got their act together to hire bankers and lawyers and a new management team. But they were not able to resolve how this carcass is going to be cut up among the various creditor groups.

Lauren: I’m talking to brands who don’t know if they should ship.

Bill: Definitely ship going forward, because with this DIP financing, they’re going to get paid to ship goods. That’s why the DIP financing is the size that it is. In the second half of last year, you frankly needed your head examined if you were a vendor shipping to Saks.

Lauren: How do you make Saks Global healthy? To me, you close the majority of the stores. You find the productive stores, focus on those, and you make this a much, much smaller business that is not going to I.P.O. Do you see a world where, three years from now, this is a success story?

Bill: Can this emerge as a smaller, more focused specialty retailer? You would know better than I. Neiman filed for bankruptcy. Now Saks has filed for bankruptcy. So this is the second bankruptcy of these entities. Hudson’s Bay, which was also owned by Richard Baker, liquidated.

So many are gone. Lord & Taylor is gone. Could there be a third bankruptcy? Of course there could be, unfortunately. What happens is that there’s a tension, as you get further along in the bankruptcy, where creditors don’t want to convert as much of their debt to equity as they probably should. They want to try to salvage some of that debt and put debt on the entity going forward so they can claim that they have debt, as opposed to equity, because the latter requires writedowns and all sorts of things that they probably don’t want to deal with.

But if they were smart, this new management team would close stores that are underperforming and make this fun again. If they don’t, it’s probably doomed to liquidation.

Lauren: Okay. Final question: Do you think that there’s a world in which Saks and Neiman split up again?

Bill: In bankruptcy, everything is for sale. And now, the creditors are effectively in charge of the equity of this company. If I were Bernard Arnault and I wanted Bergdorf Goodman, now is the perfect time to make that known. You know who the creditors are here. You know how to express your interest. If they’re really smart, they would buy up the Saks debt for a fraction of its original cost and get enough of it so that they controlled the so-called “pivotal security” here that’s going to get converted into equity ownership. And then they could buy the whole thing for pennies on the dollar.

Lauren: I think he’s too smart to do that. It’s not smart to buy Saks. It’s smart to buy Bergdorf Goodman.

Bill: This is the time to pounce.

On Macy’s opportunity: “I’m not sure this is a ‘make-or-break’ moment for them, but I’m pretty certain they stand to benefit quite a bit from the Saks Global bankruptcy if they play their cards right. Everyone is going to be looking to fill the inevitable gaps in 2026 P&Ls from whatever is going to happen to Saks, and I’m guessing a lot of the brands that snubbed Blooms and Nords are now revisiting those decisions, whether they like it or not.” —A brilliant executive

Another on the Macy’s op: “To your point on Macy’s benefiting: I am in S.F. for work and had to visit the flagship Macy’s on Union Square for lunch…I was very impressed! I think it’s a luxury retail–specific building across the street from the regular Macy’s, but it was nicely merchandised and almost beautiful in there! Hadn’t previously been in a Macy’s in 10-plus years, so my expectations were low and they were exceeded.” —A business development person

On stores that are ships: “LVMH is about to join the Marvel Universe in terms of over-the-top Disney-fication. We have giant ships landing in Shanghai, founders becoming Immortals (while donning Frank Gehry–designed swords)… I don’t know how Pharrell manages to keep a $traight face.” —A marketer

Until Monday,
Lauren

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