Amazon threatens ‘drastic action’ after Saks bankruptcy, says $475M stake is now worthless

Amazon is urging a federal judge to reject the bankruptcy financing plan proposed by Saks Global, arguing that the department store has squandered hundreds of millions of dollars in less than a year and failed to uphold its agreements. In legal documents, Amazon's representatives highlighted that after Saks acquired Neiman Marcus for $2.7 billion in December 2024, Amazon invested $475 million in the expectation that Saks would sell its products on Amazon's platform, with the tech giant providing essential technology and logistics support. Following Saks' recent Chapter 11 bankruptcy filing, Amazon's attorneys declared that the equity investment is now likely worthless. They noted that Saks has consistently failed to meet its financial targets, accruing significant unpaid invoices to its retail partners. The agreement included the creation of a "Saks at Amazon" storefront, which showcased a variety of luxury fashion and beauty products and promised Amazon a minimum of $900 million in payments over eight years based on sales. Amazon contends that Saks' bankruptcy financing plan is detrimental not only to itself but also to other creditors, as it introduces new debts into parts of the Saks corporation that did not previously exist. This situation further diminishes Amazon's standing in the repayment hierarchy, potentially limiting the amount it could recover during the bankruptcy process. In its filing, Amazon expressed its hope that Saks would address these concerns; however, they warned that if no resolution is found, they may seek more severe actions, such as appointing an examiner or trustee. During a recent hearing in U.S. Bankruptcy Court in Houston, Judge Alfredo Perez permitted Saks to access $1.75 billion in new bankruptcy financing after the retailer argued it would face immediate liquidation without this support. The judge has yet to decide on Amazon's objections. The acquisition of Neiman Marcus by Saks attracted various new investors, including figures from the tech sector, which was crucial for Amazon as it sought to enhance its luxury offerings on its extensive platform. The initial deal raised hopes for Amazon to further invest in the department store chain, as it has consistently aimed for a larger footprint in the physical retail space, experimenting with various concepts over the years. In previous years, Amazon has made similar investment arrangements, such as acquiring a 2% stake in Grubhub in 2022, which it later expanded to 18% in 2024. As of now, Amazon has opted not to comment beyond what is stated in its legal filings, while Saks has not responded to requests for comment regarding the situation.