Luxury fashion retailer Saks Global Enterprises (Saks) filed its disclosure statement and Chapter 11 plan on Sunday, 5 April. The plan is based on a restructuring support agreement (RSA) that the debtors entered into on 1 April with an ad hoc group of certain of their DIP term loan lenders (collectively, Consenting DIP Term Loan Lenders) that include, among others, Pentwater Capital Management, GoldenTree Asset Management and FFI Fund. As further discussed below, these entities will take the lion’s share of the new stock of the reorganized Saks Global debtors to be issued under the plan.

Under the RSA, members of the ad hoc group agreed to vote their claims to accept the Chapter 11 plan and, as further discussed below, the group controls the vote for five of the seven classes entitled to vote. The plan currently includes three additional classes for which the voting status remains to be determined (TBD).

The plan also provides for the creation of a litigation trust for the benefit of the holders of DIP term loan claims. The trust assets will include retained causes of action and any proceeds thereof and the trust may, according to the plan, be funded with an escrow account in an amount determined by the required Consenting DIP Term Loan Lenders.

The plan documents, however, fail to provide sufficient information to allow other creditors to cast an informed vote and therefore will need to be amended before the combined hearing on disclosure statement approval and confirmation. For example, the plan documents fail to provide what treatment “OpCo” second out noteholders and creditors holding “HoldCo II” “SGUS” note guarantee claims will receive under the plan.

SGUS is a Delaware limited liability company and wholly owned subsidiary of Saks. For ease of reference, the Saks debtors are grouped or referred to as follows:

The following organizational chart depicts the group’s corporate structure.

Source: Declaration of Mark Weinstein, Chief Restructuring Officer of Saks

Prepetition and DIP financing

The debtors entered Chapter 11 with over USD 3.4bn in funded debt, as set forth in the following table, which includes debt at the TopCo level, special purpose vehicle notes issued by SGUS, and an ABL facility that was, after the Chapter 11 filing, rolled up into the debtors’ DIP facility.

The Global Debtors entered into three DIP financing facilities – the DIP ABL facility, the DIP term loan facility, and the DIP OpCo facility – that provided them with up to approximately USD 1.24bn in new money financing. The Global Debtors’ prepetition ABL lenders committed to provide up to USD 1.5bn under the DIP ABL facility, which also included a creeping roll-up of the Global Debtors’ prepetition obligations under the prepetition ABL facility into the DIP ABL facility.

The DIP term loan facility is a USD 2.6bn delayed draw term loan facility that includes (i) USD 1bn of new money first out (i.e., first in right of payment) term loans (First Out DIP Loans) available in three draws, (ii) up to USD 808m (excluding fees, premiums and other amounts payable-in-kind) in second out term loans (Second Out DIP Loans), which are immediately junior in right of payment to the First Out DIP Loans, to replace and finance the prepetition SGUS Notes on a dollar-for-dollar, cashless basis, and (iii) up to USD 751m (excluding fees, premiums, and other amounts payable-in-kind) of third out loans (Third Out DIP Loans), which were used by SGUS to purchase participation interests in prepetition notes issued by Saks.

The plan documents do not specify the amount of prepetition SGUS notes that were replaced and refinanced under the DIP term loan facility. Likewise, the disclosure statement provides that “approximately $[●] of principal remains outstanding under the Prepetition SGUS Notes.” The SGUS notes include the USD 300m in senior secured asset based notes due 2029, issued by SGUS on 27 June 2025 and the USD 462.5m in senior secured asset based notes due 2029, the issuance of which was authorized by SGUS on 8 August 2025. Citibank is the indenture trustee and collateral agent on the prepetition SGUS notes.

The DIP term loan facility was provided by members of the ad hoc group, whose holdings across the debtors’ pre- and postpetition capital structure were set forth in a statement filed on 20 February by their counsel, Paul, Weiss, Rifkind, Wharton & Garrison and Porter Hedges as follows:

The DIP OpCo facility is a USD 1.75bn intercompany facility that provides for (i) delayed draw term loans of up to USD 1bn (excluding fees, premiums, and other amounts payable-in-kind) in principal amount from SGUS (consisting of the proceeds of the new money DIP term) to Saks, as borrower, and (ii) a cashless roll-up of approximately USD 752m of loans outstanding under the prepetition (a) FILO credit term loan credit agreement, dated as of 27 June 2025, by and among Saks as borrower and various Opco subsidiary guarantors, and (b) the NPC credit facility – i.e., the term loan credit agreement, dated as of 8 August 2025, by and among Saks as borrower and various Opco subsidiary guarantors.

The debtors’ treatment of the DIP OpCo facility claim is left bracketed in the plan documents. More specifically, on the plan’s effective date, the disclosure statement provides that SGUS, as sole holder of the DIP OpCo claims, will receive “[(a) 100% of the Equity Interests in [Saks Global Holdings LLC], (b) 100% of the Take Back Term Loans, and (c) 100% of the Take Back Preferred Units].”

Exit financing

In connection with signing the RSA, the Global Debtors and certain of the Consenting DIP Term Loan Lenders entered into a “New Capital Commitment Letter,” whereby the consenting lenders agreed to provide USD 500m in the aggregate in new financing in the form of either (i) a first lien senior secured term loan facility or an issuance of first lien senior secured notes and/or (ii) senior preferred equity issued by Saks Global Holdings (collectively, the Incremental New Money Facilities). The majority of the commitment parties must decide on the form of the Incremental New Money Facilities on or before the earlier of 15 May and seven days before the date of the combined hearing on approval of the disclosure statement and plan confirmation. In exchange for providing the Incremental New Money Facilities, the lenders will receive a commitment premium equal to 17.5% of the aggregate funding amount.

In addition to the Incremental New Money Facilities, the reorganized Global Debtors will enter into an exit ABL facility, which will be a new asset-based loan facility with first-lien priority. This facility will refinance and replace the DIP ABL facility on the plan’s effective date, and its amount, according to the disclosure statement, “will be sized in line with the Business Plan, subject to the consent of the Required Consenting DIP Term Loan Lenders. The material terms of the Exit ABL Credit Agreement will be included in the Plan Supplement.”

The plan also provides for a senior secured first lien term loan facility (Take Back Debt Facility) in an aggregate principal amount equal to USD 750m minus the principal amount of term loans issued under the Incremental New Money Debt Facility (including term loans issued through the payment in kind of any fees or premiums).

Also, either Saks Global Holdings (Holdings) or a new corporation or limited liability company that may be formed to, among other things, directly or indirectly acquire substantially all of the assets and/or stock of the Global Debtors in the Chapter 11 cases, will issue new common stock.

The plan further provides for the issuance of new preferred equity units, including redeemable preferred units of Holdings with an aggregate initial liquidation preference equal to USD 500m, subject to certain reductions. If the reorganized Global Debtors or their subsidiaries liquidate, these “Incremental New Money Preferred Units” with respect to distribution, redemption and repurchase rights, upon any winding up or dissolution, will rank senior to the common equity and all other equity interests of the reorganized Global Debtors, including the “Take Back Preferred Units.” The latter units will be a single class of redeemable preferred units of the reorganized Global Debtors with an aggregate initial liquidation preference equal to the outstanding amount of first out DIP term loan facility claims on the plan’s effective date minus the principal amount of Take Back Term Loans issued on the effective date.

Recoveries

While the plan documents set forth treatment that various classes of creditors and equity holders will receive, it fails to provide definitive treatment for the following prepetition creditors:

• SGUS noteholders;
• FILO and NPC creditors;
• OpCo second out noteholders; and
• creditors holding HoldCo II SGUS note guarantee claims.

The plan also provides that general unsecured creditors of OpCo and HoldCo II will be wiped out, except that such treatment is subject to ongoing discussions and may change. Creditors and shareholders of TopCo, on the other hand, will be wiped out.

As for holders of the DIP term loan claims, first out lenders will receive their pro rata share of the Take Back Term Loans and Take Back Preferred Units, based on treatment that the majority commitment parties elect under the New Capital Commitment Letter – a copy of which was not filed with the plan documents.

Second and third out DIP term loan lenders will receive an unspecified amount of the new Saks common stock and 100% of the net litigation trust proceeds (i.e., the DIP Lender Litigation Trust Allocation). The plan does not specify how the new common stock and litigation trust proceeds will be apportioned between these two classes. However, the requisite creditors within each class has agreed to vote their claims to accept the plan. Also, although the plan provides for a management incentive, it but does not state any amount of new common stock that will be made available for distribution thereunder.

Additional plan provisions

The plan provides typical non-debtor releases to various parties-in-interest, including the Consenting DIP Term Loan Lenders, the new capital commitment parties, and the unsecured creditors committee and its members.

In terms of timing, the debtors have asked Judge Alfredo Perez of the US Bankruptcy Court for the Southern District of Texas to hold a combined hearing on 5 June to consider approval of the disclosure statement and confirmation of the Chapter 11 plan. The debtors also seek a 1 June deadline for (i) objecting to approval of the disclosure statement and plan confirmation, and (ii) voting on the plan.

Related Links (Access Required):

Chapter 11 Plan
Disclosure Statement
Restructuring Support Agreement
Case Profile
Debtwire Dockets: Saks Global Enterprises
Debtwire Restructuring Database: Saks Global Enterprises

Prior to joining Debtwire, Sara was a law clerk to two judges in the United States Bankruptcy Court, S.D.N.Y. and practiced in the Financial Restructuring Group at Clifford Chance, where she represented financial institutions (as secured and unsecured creditors, defendants in adversary proceedings, and participants in DIP financings) in high-profile restructurings. She also represented foreign representatives in Chapter 15 cross-border cases.

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