Hoping to avoid litigation, negotiators are working hard to resolve a dispute over whether millions of dollars of luxury handbags, clothing and jewelry could be claimed as collateral for Saks‘ $1.75 billion bankruptcy loan, according to people familiar with the discussions.
Suppliers in recent weeks have demanded guarantees that lenders would not assert security interests in Saks inventory on consignment or consignment or in the cash proceeds from it, four of the people said.
Saks, the providers and bankruptcy creditors were hoping Thursday to reach an agreement before a Tuesday deadline by which objections to the loan can be filed in court, the people said. Two of the people said the discussions were almost complete, while two others reported remaining points of contention.
The 100-year-old retailer, which filed for Chapter 11 protection last month, said it could not survive without the debtor-in-possession (DIP) loan led by Pentwater Capital Management and Bracebridge Capital. The loan will allow Saks to keep stores open and pay suppliers while the company restructures its billions in debt.
The conflict highlights the delicate power structure in the restructuring of Saks. DIP lenders typically have the upper hand in such proceedings because they receive priority security interests in the debtor’s assets and, in some cases, emerge with an ownership interest in the reorganized company.
In the case of Saks, however, the brands have exceptional bargaining power. Saks’ future depends on carrying not just any brands, but a few exclusive labels that define the company’s luxury image and attract customers willing to spend up to $10,000 on a handbag.
These brands include Chanel, Louis Vuitton (owned by LVMH), Dolce & Gabbana, Christian Louboutin and Gucci, which is owned by Kering.
The sources spoke on condition of anonymity because the discussions are confidential. Saks suppliers’ concerns and possible objections to the DIP loan have not been publicly reported.
Pentwater and Saks declined to comment, while Bracebridge did not immediately respond to emailed requests for comment.
CHANEL IS LARGEST SAKS CONCESSIONARY, SOURCES SAY
At the heart of the dispute is inventory that sits on Saks shelves but remains the property of suppliers until sold. This practice is common in luxury retail, where brands operate mini-boutiques in department stores and deliver goods on a consignment or consignment basis.
A January court order preliminarily approving a portion of the DIP loan included language guaranteeing that concession and consignment goods would not be part of the lender’s collateral.
But some brands fear the credit structure could still give creditors leeway to assert claims on concession and consignment goods in certain circumstances, two of the people said.
The concessionaires want the court to confirm that their goods are not part of the Saks bankruptcy estate. This would mean that the providers retain ownership of the goods and do not simply have unsecured claims in the insolvency proceedings.
Two of the sources reported that Chanel was by far the largest concessionaire at Saks and that the roughly $136 million claim represented more than half of the claims of all concession and consignment suppliers. Chanel did not immediately respond to a request for comment.
Smaller boutique brands like Italian clothing manufacturer Kiton also have concession demands, according to two sources. Two jewelers, AJD Platinum and Vivid Blue, identified themselves in court documents as Saks suppliers who work on a consignment basis. AJD said it had $8.3 million worth of merchandise at Saks.
In their joint submission last week, the jewelers said they “under no circumstances consent to the use or sale of their consigned goods.”
date: 2026-02-13 00:03:00
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