Saks may face Chapter 11 as lenders and vendors confront wholesale risk

Saks skipped a December interest payment and could file for Chapter 11; some lenders have discussed a debt-in-possession loan and some vendors have stopped backing shipments.

Saks Global Enterprises missed an interest payment and has been reported to be at risk of filing for Chapter 11 in the coming weeks. The company operates Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman. Some existing lenders have reportedly discussed a debt-in-possession loan to keep operations running after a potential filing. At the same time, several wholesale vendors have reported unpaid bills and some have stopped backing shipments. Key facts: - Saks skipped an interest payment of more than $100 million that was due Dec. 30, and a Chapter 11 filing has been reported as possible in the coming weeks. - Some lenders have discussed a debt-in-possession loan that may include at least $750 million of new money to support operations during a bankruptcy process. - Certain wholesale vendors, including one that represents many brands, said they would no longer back shipments, and at least one supplier has filed a lawsuit over unpaid bills. - S&P Global estimated Saks' real estate at about $4.4 billion in net asset value, and the company has sold land to raise cash. Summary: The missed payment and vendor disruptions have put pressure on the company's operations and on unsecured suppliers. Possible bankruptcy filings and continued lender negotiations over a debt-in-possession loan have been reported. Undetermined at this time.