As Saks Global races to emerge from bankruptcy court, there is more focus on the “new Saks.”
The retailer, which filed for bankruptcy on Jan. 13, updated its organizational plan to the court this week, detailing the composition of its board of directors and the scope of a litigation trust it will establish with the court.
Negotiations are continuing over how much money the company’s unsecured creditors, including vendors with past-due balances, will ultimately receive.
Saks Global has filed for bankruptcy, owing $1.7 billion to unsecured creditors. Some payments have been made to vendors deemed “critical” to the business, but the rest is up in the air.
The plan, which is still being negotiated and detailed in a court filing, states that general unsecured claims will be “cancelled, waived and extinguished without any distribution by reason of such claims.”
The committee of unsecured creditors, which includes major vendors such as Chanel, Kering and LVMH Moët Hennessy Louis Vuitton, but also represents smaller vendors, agreed to the restructuring plan.
The retailer’s best hope for getting some money back appears to be a $20 million litigation trust funded by the retailer. The reorganization plan includes a long list of causes of action that the trust could investigate, which could unearth even more information about how everything went wrong at the company.
Potential causes of behavior can involve many topics, including:
Saks Global’s $2.7 billion acquisition of Neiman Marcus Group includes “negotiating, structuring, financing, approving, executing and consummating” the transaction and “decisions related to the closing of the transaction.” The retailer’s contract with Authentic Brands Group “includes all claims for fraudulent transfers, fraud, unjust enrichment, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and similar theories.” and loans, advances, forgiveness, and other transfers of value to officers.
The company’s former stockholders will also be wiped out.
But the financiers who raise the money to get a company through the Chapter 11 process literally get a seat or two at the board table.
Saks Global’s new board of directors will have seven members. These include two persons appointed by Pentwater Capital Management, two persons appointed by Bracebridge Capital, and two persons appointed by the majority holder of the company’s common stock (subject to the consent of Pentwater and Bracebridge) and the retailer’s current chief executive officer, Geoffroy van Raemdonk.
Saks Global plans to ask U.S. Bankruptcy Judge Alfred Perez for approval of the plan on June 5.
The company could exit Chapter 11 soon after that.
A Saks Global spokesperson said: “We continue to make strong progress in our financial restructuring and are quickly approaching confirmation, with restructuring to follow shortly thereafter. We look forward to completing the remaining milestones in this process and embarking on plans to achieve sustainable, profitable growth.”
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