Amazon Challenges Saks’ Bankruptcy Plan, Citing Mismanagement and Lost Investment
Meta Description: Amazon is contesting Saks’ Chapter 11 bankruptcy financing, alleging the retailer squandered funds and jeopardized a $475 million investment.
Amazon is aggressively challenging Saks Global’s recently filed bankruptcy financing plan, arguing the department store chain mismanaged its finances and effectively rendered a substantial investment by the tech giant “presumptively worthless.” The dispute centers around Saks’ acquisition of Neiman Marcus in December 2024 and the subsequent financial performance of the combined entity.
According to court filings submitted on Wednesday, Amazon invested $475 million in the Saks-Neiman Marcus venture with the understanding that Saks would actively sell its products on Amazon’s platform and leverage the company’s technological and logistical expertise. However, Amazon’s attorneys contend that 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.”
A key component of the original agreement was the launch of a branded “Saks at Amazon” storefront, offering a curated selection of luxury fashion and beauty items. Saks also committed to paying Amazon a referral fee for Saks-branded goods sold through the platform, guaranteeing at least $900 million in payments over eight years. Amazon now fears these commitments will go unfulfilled.
The e-commerce giant argues that Saks’ proposed bankruptcy financing plan unfairly disadvantages creditors, including itself, by adding new debt to portions of the Saks corporation and lowering Amazon’s priority in the repayment process. This, Amazon claims, significantly reduces the potential recovery of its investment.
“Amazon hopes Saks will resolve its concerns,” the company stated in its filing, “but if it doesn’t, it may seek more drastic remedies,” including the appointment of an examiner or a trustee to oversee the bankruptcy proceedings.
During a hearing on Wednesday in U.S. Bankruptcy Court in Houston, Judge Alfredo Perez permitted Saks to access $1.75 billion in new bankruptcy financing, acknowledging the company’s argument that it faced immediate liquidation without the funds. However, a ruling on Amazon’s objections remains pending.
The acquisition of Neiman Marcus by Saks attracted investment from various technology industry players, with Amazon seeking to expand its presence in the luxury retail market. The deal initially raised the possibility of Amazon further increasing its stake in the department store chain, as the company has actively explored opportunities in physical retail, though not all experiments have proven successful. Amazon’s previous investment strategy includes a 2% stake in Grubhub in 2022, later increased to 18% in 2024, in exchange for Prime member benefits.
Both Amazon and Saks declined to provide additional commentary beyond their official court filings. Salesforce, another minority shareholder in Saks following the Neiman Marcus acquisition, has not yet indicated whether it will also object to the bankruptcy plan.
A correction was issued regarding an earlier inaccurate quote attributed to the Amazon filing. The situation remains fluid as the bankruptcy proceedings unfold, and the future of the Saks-Amazon partnership hangs in the balance.
