Bankruptcy, Liability Management, and Credit Message Board

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Strategies & Market Trends : Bankruptcy, Liability Management, and Credit

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From: Sean Collett	12/19/2025 4:46:50 PM
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Saks Fifth Avenue: This one appears headed for a chapter filing. Earlier this year, around Jun-Aug, Saks took part in what is the growing trend of a Liability Management Exercise (LME). In a creditor-on-creditor violence move some of their lenders worked to reach a $600M deal that pushed some of the other lenders into taking losses and moving down in the recovery chain. In this exchange Saks this gave Saks $400M of a first-in-last out asset based credit facility and then $200M subject to conditions. At the time about 98% of eligible bondholders agreed to this exchange. Now after this LME the debt for the company is sinking to new lows as it's struggling to hit the $100M-$120M interest payment due in December. A portion of first-lien debt is trading around $0.12 on the $1.00 as of December 12th after being at $0.30 on December 8th. Some of their more senior debt was down to $0.60 on the $1.00. Hilldun Corp paused Saks orders during the holiday season after Saks missed two weeks of payments. I can only imagine the inventory damage by not getting things on the shelves during the holidays so not sure how they will generate the cash to cover. Saks seems to be a good case of why these LME's make lawyers rich, but likely end up in court anyway. As I have written elsewhere the purpose of an LME is to buy time and give a company time to turnaround, this LME gave Saks not years but months. Some runway. Happy investing, Sean

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