Saks Global - Chapter 11 Case Summary

Business Description

Saks Global Enterprises LLC ("SGE"), together with its Debtor and non-Debtor affiliates (collectively, "Saks Global" or the "Company"), is the largest multi-brand luxury retailer in the world, operating a portfolio of iconic American retail brands including Saks Fifth Avenue, Saks OFF 5TH, Neiman Marcus, Neiman Marcus Last Call, Bergdorf Goodman, and Horchow.

• The Company operates approximately 70 full-line luxury locations, additional off-price locations, and five distinct e-commerce experiences.
• Saks Global owns or ground leases approximately 8.4 million square feet of U.S. real estate holdings and investments.

Through its multi-channel retail platform, Saks Global connects emerging and established luxury brands with their target customers. The Company's retail model serves the unique needs of luxury brands, which prioritize quality, controlled distribution, and long-term brand equity over volume-driven sales.

Revenue Model

Saks Global generates revenue primarily through sales of luxury merchandise across its stores and e-commerce operations, including:

• Sales of owned merchandise purchased at wholesale prices from an assortment of brand partners;
• Sales of consigned merchandise;
• Revenue share from in-store concessions through the Company's "shop in shop" model; and
• Revenue share from merchandise sold through e-commerce platforms and shipped directly from brand partners.

Consignment and concession sales have remained comparatively robust in recent periods, indicating healthy customer traffic where inventory is available. The core constraint has been owned inventory flow driven by declining liquidity and vendor credit considerations.

• The Company also operates proprietary credit card programs through which credit is extended to customers, generating payments based on sales transacted on those cards.

Workforce

As of the Petition Date, the Debtors employed approximately 14,610 full-time employees and 2,220 part-time employees across all business units. The Company also hires seasonal in-store associates during peak periods, such as the holiday shopping season, to provide workforce flexibility.

• The Debtors have a small number of unionized employees and are party to seven collective bargaining agreements.

Saks Global Enterprises LLC and certain affiliates (collectively, the "Global Debtors") filed for Chapter 11 protection on January 14, 2026 (the "Petition Date") in the U.S. Bankruptcy Court for the Southern District of Texas, reporting $1 billion to $10 billion in both assets and liabilities. Affiliates operating the Saks OFF 5TH e-commerce business (the "SO5 Digital Debtors," and together with the Global Debtors, the "Debtors") filed concurrently and are seeking joint administration of their cases.

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Corporate History

The Saks Fifth Avenue brand traces its origins to 1867, when the first Saks store opened in Washington, D.C. In 1902, the first New York City location opened in Herald Square. On September 15, 1924, Saks Fifth Avenue was born when its flagship store opened on 50th Street and Fifth Avenue, becoming the first large retailer to operate in what was then primarily a residential district of Manhattan.

• Saks expanded to establish a coast-to-coast presence, currently operating 33 locations across North America.
• In 2000, Saks.com launched, and the business subsequently reoriented around the e-commerce experience.

Off-Price Expansion

In 1992, due to growing consumer demand, Saks piloted its original off-price experience through an outlet store in Franklin Mills, Pennsylvania called "Saks Clearinghouse." After the model proved successful, the Company expanded the concept and launched Saks OFF 5TH in 1995.

• In 2013, Saks OFF 5TH launched SaksOFF5TH.com, offering a broad assortment of goods across all categories and operating as a true off-price retailer.
• Today, Saks OFF 5TH operates 81 stores across the U.S. and online, offering high-end designers at accessible prices.

HBC Acquisition and Take-Private

In 2013, Hudson's Bay Company ("HBC"), then a publicly-traded company led by its Governor and Executive Chairman Richard Baker, acquired Saks Incorporated. The merger was designed to create a leading North American luxury retail conglomerate that included Saks Fifth Avenue, Lord & Taylor, and Hudson's Bay stores in Canada, with a strategic focus on the interplay between luxury retail and real estate to generate efficiencies of scale and leverage across real estate portfolios.

• Following the acquisition, HBC and Saks Global were impacted by macro-economic trends affecting brick-and-mortar retailers, including the shift to online commerce and declining foot traffic in physical stores.
• Due to continued underperformance, HBC consummated a take-private transaction in March 2020, shortly before temporary store closures arising from the COVID-19 pandemic impacted the retail industry.

Corporate Restructuring (2020-2024)

Between 2020 and 2024, HBC and Saks Global were reorganized under the same ownership, with HBC, Saks, and Saks OFF 5TH physical locations financed as a single credit group. During this period, the Saks e-commerce business effectively operated as a standalone company within the broader Saks corporate group and was financed separately.

• The Saks.com business platform and operations were reintegrated into the Saks Global credit group beginning in December 2024.
• Unforeseen challenges in the Canadian market impacted HBC's ability to invest in Saks stores, negatively affecting inventory receipts at both Saks and Saks.com.
• In early 2025, amid inflation, rising interest rates, tariff-related uncertainty, and lingering decline in foot traffic driven by post-COVID shifts in downtown occupancy and reduced in-person work near flagship stores, HBC filed proceedings in Canada under the Companies' Creditors Arrangement Act and ultimately commenced liquidation.

Neiman Marcus Acquisition

On December 23, 2024, Saks Global consummated the acquisition of Neiman Marcus Group for a total enterprise value of $2.7 billion, adding the Neiman Marcus, Bergdorf Goodman, and Last Call brands to its portfolio. Each brand continues to serve customers independently.

• New equity investors at the time of the acquisition included Amazon, Authentic Brands Group, and Salesforce.
• In conjunction with the acquisition, Saks Global raised capital through new equity and debt issuances, including $275 million in seller financing, a new $1.8 billion asset-based revolving credit facility, and new senior secured notes in an aggregate principal amount of $2.2 billion.
• The combination created a $7 billion portfolio of well-located retail real estate assets in top-tier luxury shopping destinations.

Legacy of Acquired Brands

Each of the acquired brands has its own storied history:

• Neiman Marcus: Founded in Dallas, Texas in 1907, Neiman Marcus pioneered the ready-to-wear fashion concept over custom-made creations and became a gateway to high fashion. The brand is a pioneer in customer loyalty programs and one of the first retailers to offer a gift card.
• Bergdorf Goodman: Traces its roots to a tailor's shop established in Manhattan in 1899 by Herman Bergdorf and his apprentice Edwin Goodman. By 1914, Goodman had become the first couturier in Manhattan to introduce ready-to-wear attire. In 1972, the Goodman family sold Bergdorf Goodman to what would become Carter Hawley Hale Stores, with the brand spinning off into Neiman Marcus Group in 1987.
• Horchow: Founded in 1973 as the first luxury mail-order catalog without a brick-and-mortar store, and acquired by Neiman Marcus Group in 1988. Today, the Company conducts Horchow operations through its e-commerce platform, horchow.com.

SO5 Digital Separation

In 2021, Saks OFF 5TH's e-commerce business ("SO5 Digital") entered into a series of agreements that resulted in the SO5 Digital Debtors effectively operating as a standalone company within the broader Saks corporate group.

• The separation occurred during the pandemic when e-commerce was growing substantially, with the anticipation of continued high growth. The separation was intended to attract specialized talent focusing on technology, as well as new capital seeking higher growth and returns.
• The SO5 Digital Debtors, which have their own capital structure and governance, are approximately 80% owned by Saks Global, with the remaining equity owned by funds affiliated with Insight Partners.
• While the SO5 Digital Debtors operate independently, certain operations remain consolidated within one or more of the Global Debtors, with intercompany reimbursement arrangements in place.

In light of potential conflicts between the SO5 Digital Debtors and the Global Debtors, the SO5 Digital Debtors implemented revised governance and professional structures to ensure independent representation in the chapter 11 cases.

• On December 31, 2025, Gary Begeman was appointed as Independent Director to oversee the SO5 Digital Debtors' cases.
• Andrew Hede was separately retained as Chief Restructuring Officer, reporting directly to the Independent Director.
• The SO5 Digital Debtors retained Accordion Partners, LLC as financial advisor and Bradley Arant Boult Cummings LLP as independent general bankruptcy counsel.

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Operations Overview

Saks Global's retail portfolio encompasses 33 Saks Fifth Avenue stores (approximately 4.36 million square feet), 81 Saks OFF 5TH stores (approximately 2.39 million square feet), 36 Neiman Marcus stores (approximately 5.24 million square feet), two Bergdorf Goodman stores located in Manhattan at 58th Street and Fifth Avenue, and five Last Call stores ranging from approximately 15,000 to 45,000 square feet each.

• In addition, the Company utilizes various distribution, support, and office facilities to support store and online operations.

Real Estate Portfolio

The Company utilizes both owned and leased properties in its operations. Saks Global owns or controls ground leases, either entirely or with joint venture partners, on 39 retail properties throughout the United States comprising more than 5.5 million square feet of gross leasable area.

• The owned and ground leased real estate portfolio is concentrated in top metropolitan regions with high population density and higher than average household income.
• The portfolio includes the Saks Fifth Avenue New York City flagship, recognized as one of the world's premier luxury department stores. The flagship building and land is owned by non-Debtor affiliate Saks Flagship Real Property LLC and is subject to a $1.25 billion mortgage loan which has been securitized.

HBS Joint Venture

The Company is a partner in a real estate joint venture (the "HBS JV") with Simon Property Group Inc. and other third-party investors. The HBS JV holds 31 properties in the United States, and Saks Global currently owns approximately 62.4% of the equity interests.

• Each property is held in a separate special purpose entity operating as landlord, with properties contributed by the Company leased back pursuant to portfolio operating leases with an initial term of 20 years and five six-year extension options.
• Certain fee and leasehold interests owned by the HBS JV secure a real estate loan in an aggregate outstanding principal amount of approximately $428.1 million, which has been securitized.

Axonic Pledge Dispute

In 2021, an affiliate of Axonic Coinvest II, LP ("Axonic") purchased certain HBS CMBS Loan bonds. In connection with this purchase, Axonic and certain Global Debtors entered into several agreements, including Conditional Bond Purchase Agreements ("CBPAs") providing Axonic with the ability to require SGE or Holdco II to purchase certain bonds at specified times and prices (the "Put").

• The Put originally became exercisable on March 14, 2024, but has been extended several times to October 31, 2025, with Axonic receiving at least $5.5 million in exchange for such extensions.
• On December 15, 2025, Axonic agreed to forbear from exercising the Put until January 31, 2026, subject to certain conditions including continued good faith negotiations and a payment of $13 million.
• On January 7, 2026, despite ongoing negotiations, Axonic sent a notice purporting to exercise its rights under the Put. The Debtors assert this exercise was in breach of the forbearance agreement and therefore invalid.
• The Debtors intend to bring an adversary proceeding seeking declaratory judgment that the Put notice is invalid and damages for Axonic's alleged breach of the forbearance agreement, absent a consensual resolution.

Commercial and Joint Venture Arrangements

Authentic Brands Joint Venture: The Company is party to a joint venture with Authentic Brands Group, owner of more than 50 global brands. The Company and Authentic Brands each own 50% of Authentic Luxury Group LLC ("ALG"), which collects royalties from sales of products and services using the Saks Fifth Avenue, Saks OFF 5TH, Neiman Marcus, and Bergdorf Goodman brands.

• Certain agreements provide that upon certain triggers, including bankruptcy filing by certain Global Debtors, Authentic Brands' preferred equity in Saks Global Investor L.P. will be exchangeable for newly-issued equity in ALG.
• The Company's equity in ALG is not pledged as collateral under the Debtors' indebtedness.

Amazon Partnership: Certain Global Debtors are party to a commercial agreement with Amazon to maintain a new "Saks on Amazon" virtual storefront, which launched in April 2025. The partnership combines Saks' luxury fashion expertise with Amazon's technology-driven shopping experience.

• As part of this arrangement, SGE is required to pay referral fees to Amazon, with potential true-up payments for any shortfalls based on certain annual minimum amounts up to an aggregate of $900 million over eight years.

Operational Footprint Optimization

As part of its restructuring, the Company is evaluating its operational footprint to ensure it is well-positioned to invest in areas that present the greatest opportunities for sustainable, long-term growth for its luxury retail brands and partners.

• On the Petition Date, the Global Debtors are seeking to reject certain leases related to "dark stores"—locations that the Company has not operated out of for some time.
• These rejections will have no impact on employees or day-to-day operations.

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Prepetition Obligations

As of the Petition Date, the Global Debtors report approximately $3.4 billion in prepetition funded debt obligations. The Company's prepetition capital structure is summarized below:

TopCo Debt

• Approximately $275 million in aggregate principal amount ($310 million inclusive of paid-in-kind interest) is outstanding under a senior secured term loan facility that arose from seller financing in connection with the acquisition of Neiman Marcus Group.
  • The facility is governed by a Credit Agreement dated December 23, 2024, with GLAS USA LLC serving as administrative agent. Debtor Mercury Aggregator L.P. is the borrower.
  • The TopCo Debt matures on February 3, 2026 and is guaranteed by Mercury Aggregator Holdco LLC, HBSFA Holdings Ltd., and HBC GP IV LLC.
  • Security consists of substantially all personal property of the obligors, including pledges of equity interests owned by these entities.
  • A Springing Guaranty from Lisa and Richard Baker Enterprises, LLC provides a contingent, non-recourse guarantee capped at $100 million.

ABL Facility

• Approximately $442.16 million in aggregate principal amount of loans is outstanding under a senior secured asset-based revolving credit facility with total commitments of $1.8 billion, with Bank of America, N.A. serving as administrative and collateral agent.
  • An additional $56.6 million in face amount of letters of credit remains issued but undrawn.
  • SGE is the borrower, with Saks Global Holdings LLC and the Opco Subsidiary Guarantors providing guarantees.
  • The facility matures on December 23, 2029, subject to a springing maturity mechanism tied to certain other debt maturities.
  • Obligations are secured by a first priority lien on ABL Priority Collateral and a second priority lien on Notes / Term Priority Collateral.

SPV Notes

• Approximately $762.5 million in aggregate principal amount is outstanding under 11.00% senior secured asset based notes due 2029, issued by SGUS.
  • The notes were issued in two tranches: $300 million of Initial SPV Notes in June 2025 and $462.5 million of Additional SPV Notes in August 2025 in connection with the Exchange Transaction.
  • Citibank N.A. serves as trustee and collateral agent.
  • Holdco II provides a guarantee up to a maximum of $200 million.
  • The SPV Notes mature on December 15, 2029.

Opco Notes

• The Company has approximately $1.89 billion in aggregate principal amount outstanding across three tranches of notes, all maturing on December 15, 2029:
  • 2O Notes: Approximately $1.4 billion in second out notes issued in connection with the Exchange Transaction.
  • 3O Notes: Approximately $440.8 million in third out notes issued in connection with the Exchange Transaction.
  • Old Notes: Approximately $51.2 million remaining from the original $2.2 billion notes assumed by SGE in December 2024.
• The notes are secured on a pari passu basis with the NPC Onloan and carry a first priority lien on Notes / Term Priority Collateral and a second priority lien on ABL Priority Collateral.
• Payment priority under the Payment Administration Agreement ranks the notes as follows: 2O Notes rank senior to 3O Notes, which rank senior to Old Notes. All Opco Notes rank junior to the FILO Onloan and NPC Onloan.

Intercompany On-Loans

• Following the issuance of the SPV Notes, SGUS extended two intercompany on-loans to SGE:
  • FILO On-Loan: $400 million original principal, secured by a first priority lien on ABL Priority Collateral and a second priority lien on Notes / Term Priority Collateral. The FILO Onloan ranks senior to the NPC Onloan when outstanding amounts exceed $300 million.
  • NPC On-Loan: Approximately $362.5 million original principal, secured on a pari passu basis with the Opco Notes. The NPC Onloan ranks equal to the FILO Onloan once FILO amounts fall to $300 million or below.

LC Facility

• SGE maintains an uncommitted letter of credit facility with Evolution Credit Partners to backstop certain workers' compensation insurance obligations.
  • Letters of credit with an undrawn face amount of approximately $32.7 million are outstanding as of the Petition Date.
  • The facility terminates on October 7, 2028.

SO5 Digital Debtors - Term Loan

• Certain of the SO5 Digital Debtors have a $20 million senior secured term loan outstanding under a Term Loan Credit Agreement dated August 6, 2021, with Callodine Commercial Finance, LLC serving as administrative and collateral agent.
  • Saks OFF 5TH LLC is the borrower, with Saks OFF 5TH Holdings LLC and Luxury Outlets USA, LLC serving as guarantors.
  • The SO5 Term Loan matures on August 6, 2026 and is secured by substantially all assets of the SO5 Obligors.
  • On January 7, 2026, the SO5 Term Agent issued a Notice of Default alleging that the SO5 Digital Debtors had defaulted by failing to maintain availability under the SO5 ABL Facility.
• Shortly before filing, the SO5 Digital Debtors repaid and terminated their senior secured asset-based revolving credit facility (the "SO5 ABL Facility"), which had capacity of up to $85 million. On December 19, 2025, the ABL Agent placed a block on availability, and approximately $7 million in principal was repaid using collateral proceeds and cash on hand. A final payoff of $339,240.16 was wired on January 6, 2026. As a result, the SO5 Term Loan is the only remaining funded debt obligation of the SO5 Digital Debtors.

Excluded Non-Debtor Debt

• The $3.4 billion in funded debt does not include obligations of non-Debtor affiliates, including:
  • A CMBS loan associated with the flagship property totaling approximately $1.25 billion.
  • A CMBS loan associated with the HBS JV totaling approximately $428.1 million as of January 1, 2026.

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Events Leading to Bankruptcy

Acquisition-Driven Liquidity Constraints

• Saks Global faced immediate liquidity challenges following its 2024 acquisition of Neiman Marcus Group.
  • The Company financed the acquisition using $2.2 billion in notes, drawings under its ABL Facility, seller financing in the form of TopCo Debt, and a $1.544 billion equity contribution. The resulting capital structure proved unsustainable.
  • Although the Debtors anticipated $600 million in total run-rate synergies over five years post-acquisition, near-term liquidity remained severely constrained, preventing timely vendor payments.
• The Company's challenges were not driven by declining consumer demand. Where inventory was available, performance remained robust, and the Company's most lucrative customers continued spending through its retail channels. Rather, liquidity constraints made it increasingly difficult to acquire the inventory necessary to meet customer demand.

Deteriorating Vendor Relationships and Inventory Shortfalls

• The inability to pay vendors on time exacerbated payables balances and strained relationships with brand partners, creating a self-reinforcing cycle:
  • Vendors became unwilling to ship goods, leaving the Company unable to build adequate seasonal inventory heading into Spring 2025.
  • Declining inventory levels reduced the borrowing base under the ABL Facility, further constraining liquidity.
  • The Company hit credit caps with vendors unwilling to increase exposure, forcing accelerated payments that limited flexibility in managing inventory flow.
• During fiscal year 2025 (ending February 1, 2025), consolidated total revenue declined 13.6% year-over-year, driven primarily by lower retail sales across all channels. Second quarter 2025 performance was softer than expected, leading to unsustainable levels of aged trade payables.

Failed Financing Initiatives

• Beginning in February 2025, the Company pursued strategies to address its liquidity crisis, targeting new financing to catch up on vendor payments, capture acquisition synergies, and address a June 30 interest payment deadline.
  • On April 28, 2025, the Company announced commitments for a $300 million FILO loan from SLR Credit Solutions and a $50 million secured term loan for certain subsidiaries. However, the SLR financing could not be executed on the committed terms.
  • Financing delays led to incremental stretching of accounts payable, further damaging vendor relationships.

Exchange Transaction and Continued Shortfalls

• In Summer 2025, the Global Debtors secured $600 million (before fees and prepaid interest) in new money financing from existing bondholders and completed an exchange transaction:
  • In late June 2025, the Company secured commitments for SPV Notes to be funded in two tranches, beginning with $300 million in June.
  • In August 2025, holders of approximately 98% of the Old Notes tendered their notes, and the Company received an additional $300 million in gross proceeds from SPV Note sales.
  • The transaction captured approximately $115 million of discount in principal amount of the Old Notes.
• Despite closing the Exchange Transaction, proceeds proved insufficient to normalize operations:
  • Only $244 million could be used for vendor catch-up payments; remaining proceeds were required for working capital and Neiman Marcus integration expenses.
  • Merchandising system integration issues disrupted inventory receipts at Neiman Marcus and Bergdorf Goodman during a critical pre-holiday period when sales and inventory were already at seasonal lows.
  • In the second half of 2025, the Company received over $550 million less in inventory than its July forecast, negating the benefits of the vendor paydown.

ABL Facility Constraints and Liquidity Crisis

• The Company faced a convergence of liquidity pressures heading into the 2025 holiday season:
  • Minimum excess availability covenants under the ABL Facility stepped up from $200 million to $375 million on December 1, 2025, and to $500 million on December 16, 2025.
  • Over $50 million in discretionary reserves were imposed under the ABL Facility throughout 2025.
  • On December 4, 2025, the ABL Agent triggered control over certain deposit accounts pursuant to deposit account control agreements.
  • Interest payments totaling approximately $126 million on the FILO Loan, NPC Onloan, SPV Notes, and OpCo Notes came due at the end of December 2025, which the Company was unable to pay.
• These factors created what the Company characterized as a "perfect storm" of liquidity challenges heading into January—historically a seasonal low point for sales and liquidity.

Governance Enhancements and Leadership Changes

• To address the deteriorating situation, the Global Debtors implemented significant governance changes:
  • Restructuring professionals at Willkie Farr & Gallagher LLP and PJT Partners L.P. were engaged to augment previously retained advisors at BRG.
  • Independent managers Paul Aronzon and William Tracy were appointed to the board of HBC GP LLC and subsidiary entities, forming a Special Committee.
  • Scott Vogel was approved for appointment as an independent director, subject to interim DIP order entry.
• The Company announced key leadership appointments:
  • Geoffroy van Raemdonck, former CEO of Neiman Marcus Group who led the company through its COVID-era restructuring, was appointed Chief Executive Officer of Saks Global.
  • Lana Todorovich (former Chief Merchandising Officer at Neiman Marcus) and Darcy Penick (former President of Bergdorf Goodman) joined to support the leadership team.

Prepetition Strategic Alternatives

• In late 2025, the Debtors explored potential value-maximizing transactions outside of chapter 11, including with key equity holders and third-party investors:
  • Options considered included asset sales, financing alternatives with new and existing lenders, and holistic restructuring transactions.
  • The Company was ultimately unable to reach agreement on terms for any out-of-court transactions.
• In mid-December 2025, the Global Debtors began engaging with key creditor constituents and third-party investors on debtor-in-possession financing terms:
  • An ad hoc group of noteholders holding approximately 72% of SPV Notes and 50% of 2O Notes (the "Ad Hoc Group") engaged Paul, Weiss, Rifkind, Wharton & Garrison LLP, FTI Consulting, and Lazard.
  • ABL Lenders engaged Morgan, Lewis & Bockius LLP, Otterbourg P.C., and M3 Partners.

Positive Business Indicators

• Despite tight liquidity, the business showed multiple positive indicators that the Global Debtors can leverage with sufficient funding:
  • Company data indicates that when stores have inventory, the inventory sells—no significant capital expenditures or marketing investments are required to redirect business trends.
  • The Company achieved approximately $300 million in identified run-rate synergies, nearly double the initial year-one expectations of $150 million.
  • Since August 2025, the Company has operated from one unified merchandising platform, unlocking significant margin potential through optimized inventory allocation across Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman.
  • Comparable sales at Saks Fifth Avenue stores and Saks.com improved in November 2025, reflecting improved inventory flows.
  • Concession sales outperformed expectations every month of fiscal year 2025, with comparable sales ranging from 2% to 18% year-over-year growth.
  • Customer retention rates exceed 90% for customers spending at least $10,000 annually, with the top 3% of customers (who spend more than $10,000 annually) generating approximately 40% of annual gross merchandise value.

DIP Financing and Path Forward

• Negotiations culminated in three debtor-in-possession financing facilities providing nearly $1.75 billion in new money:
  • ABL DIP Facility: A $1.5 billion revolving facility from existing ABL Lenders with materially improved terms, including reduced reserves and minimum excess availability covenants. The facility provides approximately $240 million in incremental availability over the prepetition ABL Facility and includes interim and final roll-up mechanisms for prepetition obligations.
  • SGUS DIP Facility: A $2.6 billion delayed draw term loan facility backstopped by the Ad Hoc Group, consisting of $1 billion in new money first-out term loans, up to $808 million in second-out roll-up loans, and up to $751 million in third-out DIP loans. The facility includes a commitment of $500 million in exit financing.
  • OpCo DIP Facility: A $1.75 billion intercompany facility through which SGUS will lend proceeds to SGE, including up to $1 billion in new money and cashless roll-ups of approximately $752 million in prepetition intercompany loans.
• With these chapter 11 cases and DIP funding, the Global Debtors aim to right-size their capital structure, restore vendor relationships, and emerge as a stronger partner to brand partners going forward.

SO5 Digital Debtors (Saks OFF 5TH E-Commerce)

• The Saks OFF 5TH e-commerce business was separated into a standalone company in 2021 during the pandemic e-commerce boom:
  • The SO5 Digital Debtors are approximately 80% owned by Saks Global, with remaining equity held by outside investors including funds affiliated with Insight Partners.
  • The separation was intended to attract specialized technology talent and new capital seeking higher growth returns.
• The e-commerce business faced its own challenges:
  • Substantial infrastructure investments did not yield anticipated returns on investment.
  • Difficulty selling through inventory balances negatively affected working capital and liquidity, preventing the purchase of new inventory to meet consumer demands.
  • As the Global Debtors considered strategic alternatives, the SO5 Digital Debtors' lenders took actions causing further liquidity constraints.
• In light of potential conflicts with the Global Debtors regarding intercompany claims, the SO5 Digital Debtors implemented independent governance:
  • On December 31, 2025, Gary D. Begeman was appointed as Independent Director to oversee the cases and ensure decisions are made in the SO5 Digital Debtors' best interests.
  • Following his appointment, managers appointed by Insight Partners resigned and certain governance rights were waived.
  • Separate restructuring professionals were retained, including Accordion Partners as CRO and financial advisor and Bradley Arant Boult Cummings LLP as independent bankruptcy counsel.
• The SO5 Digital Debtors intend to conduct an orderly sale process to maximize stakeholder value:
  • Based on preliminary market feedback, an inventory monetization strategy is most likely to optimize recoveries.
  • Unless a superior alternative emerges, the SO5 Digital Debtors will proceed with an orderly self-liquidation and wind-down of the e-commerce business only (not the brick-and-mortar Saks OFF 5TH stores).