Saks Global’s Expensive Journey Through Bankruptcy

While Saks Global slunk toward bankruptcy in January — and hoped against hope that court might be avoided — some eagle-eyed observers worried the retailer wasn’t moving quickly enough. 

Turns out, it’s expensive to run out of money.

Saks Global is now hitting its benchmarks and is rapidly transforming its business under court supervision and a new management team. The company, which owns Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman, is setting itself up for a second, post-bankruptcy life focused first on being a retailer. 

But the professional fees for lawyers, bankers and more can pile up quickly. It is simply an expensive and difficult business and law firms that can handle a complex bankruptcy like Saks’ don’t come cheap.

Saks Global’s law firm, Willkie Farr & Gallagher, requested court approval for fees totaling $5.7 million. While it’s hard to compare different cases, that is in line with fees charged in bankruptcies across industries.

Willkie Farr’s bill covers work by a small army of lawyers from Jan. 14 through Jan 31. The full cost for all of February and March won’t be revealed until later, although the legal work can be more intensive in the early part of a bankruptcy. 

All together, Willkie Farr billed for 3,572.8 hours at an average hourly rate of $1,842.58. 

While some of the lawyers spent as little as 20 minutes on the case, the legal shepherding of Saks Global clearly took over the lives of others. 

One restructuring partner at Willike Farr billed $506,174.50 for 181 hours at $2,796.54. 

Another partner billed $454,632.50 for 219 hours at $2,075 an hour — that works out to more than 12 hours a day for two-and-a-half weeks straight. 

Saks Global’s bankers have been working away, too, although they don’t have quite as much to do as the legal team. PJT Partners billed $92,903 for the two-and-a half weeks, detailing internal calls discussing Saks Global, email correspondence, review of materials and so on over a total of 770.5 hours worked.

More than expensive, or lucrative depending on which side you sit, bankruptcy is surely exhausting. 

And it’s been a marathon, not a sprint. 

Previous court filings showed Saks Global paid $32.2 million to Willkie Farr between June and the filing, covering bankruptcy and other expenses. 

Count that as a small window into the incredibly complex world of bankruptcy, where a business’ hard and confounding exterior is pulled back, its accounts are settled for better or worse and the details of its operations are laid bare before the law. 

In that vein, a separate filing on Tuesday detailed the February results of Saks Off 5th Holdings LLC, which houses the off-price business’ e-commerce side.

The division, which operates as a stand-alone company, is being wound down now, but the financial snapshot gives a sense of just how the retailer found itself in dire straits. 

The digital business logged sales and other receipts of $24 million for February, but also paid out $14.7 million to cover principle and interest on its term loan as well as $3.4 million in intercompany disbursements. 

Saks Off 5th’s digital arm went into bankruptcy with $233.7 million in unsecured debt, owed primarily to vendors.