Company seeks up to $1 billion loan ahead of possible Chapter 11 filing
Saks Global Enterprises is lining up a loan of as much as $1 billion to help finance its operations as it prepares for a potential Chapter 11 bankruptcy filing in the coming weeks, people familiar with the matter say. The financing would be intended to keep the business running while the company reorganizes under court protection.
What a Chapter 11 filing would mean
Chapter 11 allows a company to continue operating while it restructures its debts and negotiates with creditors. If the filing goes ahead, Saks Global Enterprises would likely seek court approval for the loan as a debtor-in-possession (DIP) facility. A DIP loan typically gets priority over existing debt, giving lenders added protection in exchange for supplying liquidity during the restructuring.
Why the loan matters
- Keep operations running: The primary purpose of such financing is to provide working capital so stores, online channels, suppliers and staff can continue functioning without immediate disruption.
- Preserve value: With steady funding, the company has a better chance to stabilize sales and inventory levels, preserving value for stakeholders while a longer-term plan is developed.
- Attract investors or buyers: Having secure short-term financing can make the company a more viable candidate for restructuring deals or a sale process.
How a DIP loan typically works
DIP loans vary by situation, but some common features include:
- Priority claims in the bankruptcy process, often ahead of existing lenders.
- Strict reporting and operational controls imposed by the court and lenders.
- Short-term duration—usually designed to bridge the company through the restructuring process.
Possible impacts on employees, customers and suppliers
Securing a DIP loan is intended to reduce disruption, but the path forward can still bring changes:
- Employees: Day-to-day operations may continue, but longer-term staffing decisions could follow as the company restructures.
- Customers: Stores and online services typically remain open during Chapter 11, though sales and promotions may shift as the company focuses on stabilization.
- Suppliers: Vendors may face renegotiated terms or requests for extended payment arrangements, but the loan can help ensure ongoing supply if the court and lenders permit it.
Timing and next steps
People familiar with the matter say a filing could happen in the coming weeks. If the company files, the next steps usually include:
- Filing a restructuring plan and negotiating with major creditors.
- Seeking court approval for the DIP loan and any operational changes.
- Exploring options such as asset sales, debt-for-equity swaps, or a negotiated reorganization.
Broader context for the retail sector
Retailers have faced growing pressure from changing consumer habits, high operating costs and tight credit conditions. For a large retail operator, a timely infusion of financing can be decisive in preserving business value and buying time to craft a viable turnaround plan.
What to watch
- Whether the company formally files for Chapter 11 and when the filing occurs.
- Who provides the DIP financing—banks, existing creditors or new lenders—and the terms attached to the loan.
- Announcements about store operations, workforce plans or a broader restructuring blueprint.
As developments unfold, the structure and size of the loan, along with court decisions, will shape the company’s options and the likely pace of any reorganization. For now, the proposed financing is aimed at keeping the business running while those options are explored.