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A slew of fashion labels and jewelers caught up in Saks Global’s bankruptcy are refusing to ship new merchandise to stores — worried that they won’t get paid as the luxury giant is locked in a high-stakes court battle with Amazon, The Post has learned.
Amazon — whose $475 million claim makes it the largest creditor to the bankrupt owner of Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman — has objected to the retailer’s proposal for a $1.75 billion debtor-in-possession loan to keep its operations going.
The Seattle-based e-tailing giant argues that the DIP financing is backed by a stake it acquired in the Saks Fifth Avenue flagship store in New York City — and is pushing the retailer to sell the posh building in Midtown Manhattan to pay off its debts, according to court papers.
Amazon, whose mammoth claim stems from a flopped e-commerce partnership with Saks, has vowed to use all “available legal remedies” to fight for its money, according to court documents.
“Hundreds of brands, which make up a significant portion of our annual sales, are shipping to us, accounting for a significant share of our forecasted Q1 receipts,” Saks Global said in a statement.
Still, many vendors watching the battle unfold are worried that it could curtail the funding that’s been earmarked for them. The top 30 unsecured claims against Saks total nearly $700 million.
“The bankruptcy has not been finalized. There is only a preliminary agreement which Amazon is protesting and who knows what will happen,” said John Staelin, chief financial officer at Elizabeth Locke Jewelry, a longtime vendor to Neiman Marcus.
The lurking fear is that the bankruptcy could risk turning into a liquidation, sources tell The Post. A number bankruptcies in recent years have resulted in big chains disappearing altogether, among them Toys R Us, Big Lots and Stage Stores.
“We have seen way too many bankruptcies go straight into liquidation and burn vendors twice,” said bankruptcy attorney David Tawil, a partner at Castle Harbour, an insurance brokerage.
“Saks filed for bankruptcy on a rushed basis without a reorganization plan even in mind, and it was taken over by new leadership upon the bankruptcy filing,” Tawil added.
A lack of merchandise “led to a downward spiral” at Saks, its new chief executive Geoffroy van Raemdonck admitted to CNBC on Thursday. “The first step is to rebuild the trust with the brands. We are fast and furious in rebuilding that trust,” he told the network.
Van Raemdonck, who led Neiman Marcus through its 2020 bankruptcy, said $500 million in DIP financing has been approved by a judge and “will start flowing towards our stores.”
Still, insiders note that another $700 million is being challenged by Amazon — making some suppliers think twice about shipping fresh goods.
“Customer traffic is down, because the stores are not merchandised properly,” one veteran Neiman Marcus employee who asked to be identified told The Post.
One worker at Bergdorf Goodman told The Post “I’m down [in commissions] over 50%,” because the store has gone an “entire fourth quarter without new shipments.”
Vendors, meanwhile, have been taking their merchandise elsewhere even before the Jan. 14 bankruptcy filing.
“A lot of my clients are shipping greater amounts to Bloomingdales than ever before,” said attorney Anthony Lupo, chairman of ArentFox Shiff’s fashion and retail group.
Bloomingdales comparable sales were up 9% in the most recent quarter or the biggest increase in 13 quarters as designers like Christian Louboutin, Victoria Beckham, Zimmerman and Roger Vivier began doing business with the retailer for the first time, the company reported in November.
Some vendors haven’t been paid for goods they shipped to Saks Global more than a year ago. Now, they’re demanding so-called “critical vendor” status which would guarantee repayment of some or all of their pre-bankruptcy debt.
“There are vendors who won’t ship at all right now and others want some cash on delivery,” Lupo said.
Another attorney for Saks vendors, Joe Saracheck, said he advised his clients not to ship unless they have been given critical vendor status.
“They need the money so desperately,” he said of his clients.
Manhattan’s Diamond District jewelers are also swept up by the bankruptcy, according to Jim Shenwick who is representing five businesses that sent the Saks Fifth Avenue flagship between $50,000 and $200,000 worth of jewelry each, he said.
“There are many vendors on 47th Street who are stuck,” he told The Post. “The people who call me are devastated.”
Still, some are still shipping jewelry to Saks to maintain cash flow and a relationship with the retailer, he said.
New York City-based jeweler Mimi So – whose designs were featured on Sex and the City and who created the wedding rings for David Bowie and his super model wife Iman – pulled her treasures from Neiman Marcus stores in early January, according to a Neiman Marcus employee.
The jeweler “was panicking,” because she hadn’t been paid in a year, the source said. So did not return calls requesting a comment.
Elizabeth Locke Jewelry – known for its vintage gold baubles – took back most of its consignment pieces from Neiman Marcus stores in July after months of broken promises by Saks Global to pay for items that were sold, the company’s CFO told The Post.
The Virginia-based designer, which has a store on Madison Avenue, tried to remove the rest of its pieces in late December when chatter of an imminent bankruptcy filing was heating up.
“I guess corporate put a kibbosh on it, because the people we deal with told us they had to request permission” to pack up and return the goods, Staelin told The Post.
Staelin declined to disclose how much his company is owed.
“Obviously everyone is angry about not being paid,” he said. “All vendors have lost trust and that takes time to rebuild.”
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