By Dietrich Knauth
Feb 20 (Reuters) – A U.S. bankruptcy judge on Friday gave final approval to Saks Global’s bankruptcy financing, which provides $1 billion in new funding to the company, after Saks reached deals with luxury brand vendors that had raised concerns about goods shipped to the retailer before it went bankrupt.
Saks received initial pushback on its bankruptcy financing from brands such as Dolce & Gabbana, as well as landlords and Amazon.com, which had partnered with Saks on an online sales platform. But the company resolved those objections before a Friday court hearing in Houston.
With most of the objections resolved earlier, U.S. Bankruptcy Judge Alfredo Perez approved the financing at the court hearing.
Many of the vendors had raised concerns that the bankruptcy loan could allow Saks’ lenders to claim collateral rights to millions of dollars in luxury handbags, clothing and jewelry that the luxury brands had sent to Saks on consignment. Saks and the lenders resolved those concerns and agreed that the inventory provided on consignment was not Saks’ property.
The vendors’ contracts with the retailer allowed them to continue to own the inventory until it is sold, even while it sits on Saks’ shelves. This arrangement is common in luxury retail, where labels operate mini boutiques inside department stores and supply goods on concession or consignment.
(Editing by Rod Nickel)
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