American court hearing recordings and interviews - 10 - Saks bankruptcy court hearing, 2/13/2026

Episode Date: February 14, 2026

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Good morning. It's 9 o'clock on Friday, February 13, 2026. We're here in case number 26-903, Sachs Global Enterprises. There's several matters set for here. Why don't we get appearances? And then we can proceed. Good morning, Your Honor. Betsy Feldman. What's good. Do you love it? See, you? Give me. You can pass up the global debtors. I'm going to go ahead and activate the handraising feature, so hit 5 star 1-9, please. Line unmuted.

Line muted. Line muted. Good morning, Your Honor. Betsy Feldman from local bar and Gallagher on behalf of the global debtors. I'm joined today by my colleague Jennifer Hardy and Nathaniel Ward. Good morning. Good morning, Your Honor. Michael Bearden on behalf of the SO5 digital debtors.

joining me online is my colleague Jared Martin and also joining us today online to ask for any questions the court may have are Andrew Heeb, CRO, SO5 digital debtors. My understanding is Mr. He is under the weather this morning so he is on the phone but he is not currently on camera. And Timothy J. Schilling, President of J.R.R.S.L.C., a proposed application consultant.

All right, thank you. All right. Yes, Mr. Schilling. All right. Uh, go ahead. Good morning, Your Honor. Did I unmute me? Okay. Yeah, you're muted.

Good morning, Your Honor. We're in Zamora and Eusey, Morrison and Forrester proposed co-counsel through the official committee of unsecured creditors. I believe I'm joined by my partner, Ben Butterfield. All right. All right. Um, Mr. Wood? Yep.

There you go. Uh, good morning, Your Honor. How went for the U.S. trustee. All right. Uh, Mr. Hess. Good morning, Your Honor. Go ahead.

Yes, on behalf of Capital One. All right, and Ms. Miller? Well, I don't think I have unmuted you. Hold on. Try again. Good morning, Your Honor. Jerry Lee Miller is from Siddly Austin on behalf of Simon Property Group. All right.

And Mr. Mayor. Good morning, Your Honor. Simon Meyer on behalf of Utica Square Shopping Center, Inc. All right. Anyone else wish to make an appearance? A five-star, Mr. Hopkins. All right? Good morning, Your Honor.

Chris Hopkins of Paul Weiss on behalf of the ad hoc group of bondholders and deblenders. All right. All right. Your Honor, if I may proceed. There's a couple of more people that are hitting five-star. Let's just make sure we get all the appearances. Good morning, Your Honor. This is James Richards on behalf of the city of Dallas.

I intend just to listen. All right. Thank you, sir. Good morning, Your Honor. I said, good morning. Kelly, Brian Warren. I'm sorry. It's okay, Your Honor.

Good morning. Robert Leehain, Kelly Dry and Warren, on behalf of GDP retail LLC and several other landlords. Thank you. All right. Hi, Ms. Elman, go ahead. Thank you, Your Honor. The debtors filed an amended agenda this morning at docket number 776. In terms of process, we were thinking that it made sense to go down the agenda in order.

And with that, Your Honor, I will turn it over to counsel for the SO5 digital debtors to begin with item 1A. All right. Go ahead. Thank you, Your Honor. This morning on the SO5 digital debtors liquidation sale motion at ECF 400. We filed a witness and exhibit list a little bit earlier this week at ECF 756.

He had five exhibits. Exhibit 1 at 756-1. It's a declaration of Andrew D.J. Heed in support of the first-day declaration, or the first-day pleadings, rather. At Exhibit 2 at 756-2 is a consulting agreement. At 756-3, Mr. Heads' declaration in support of the liquidation motion. At 756-4, we have the declaration of Dynos C.E.J. showing in support of the liquidation motion.

And at 756-5, we have the supplemental declaration of TNCJ showing in support of liquidation cell motion. We do ask that all exhibits be admitted. If this one before had already been admitted in the interim, he asked to have that carried forward. All right. Does anyone object to the admission of, well, the consulting agreement, they object to the admission of the consulting agreement at 756-2? All right. Here are no objection that will be admitted.

With respect to, wasn't Mr. Heath's, he, he, he, Is he's declaration also admitted before 756-3? It was, Your Honor. That abused from hearing. Okay. So the only, the only, the, does anyone object to the admissions of the declarations that were previously admitted at the interim hearing

being used in connection with this hearing? Here are no objections. The declarations at 756-1, 756-1, 750. 1756-3 and 756-4 will be admitted. Now, the new declaration, does anyone object to the declaration of Mr. Schilling, the supplemental declaration of Mr. Schilling at 756-5 used as his direct testimony in connection with this hearing? Hearing no objection that will be admitted subject to cross-examination. So all these are reserved to Mr. Reardon.

Okay. Thank you, Your Honor. And last, you know, housekeeping, we did file a proposed final order on the motion last night at ECF 773. Of all these, we're getting been so late. We were working hard up until the last minute to try to incorporate comments. We do anticipate filing a slightly revised formal order after the hearing. We did receive a couple of comments shortly before the hearing that we weren't able to incorporate yet, but we think we'll be able to upload an agreed order after the hearing, no problem.

No formal objections have been filed. Sorry, Your Honor. No, go ahead, go ahead. No formal objections have been filed. As I mentioned, we have been in discussions to incorporate informal comments, a number of parties. First off, starting with the UCC. This is our first opportunity to work with UCC on substantive relief. And I think we've had big discussions with them about, you know,

the really sought here and just broader discussions about the SO5 digital estates or sort of a little cul-de-sac at the greater SAC's neighborhood and how the finances the dynamic are a little different because we are doing liquidation. And we also have a smaller universe of vendors, so it's a little bit easier to keep track and directly communicate with them. And I do think I mentioned at some point during our discussions that I would make a similar statement for the statement I made on the record at the interim. We're there in consignment and concession goods, things of that nature. And that is just to say this order is about prejudice to any party's rights with respect to that inventory. And that includes any rights to the SO5 digital debtor to sell that inventory. Everyone's rights are preserved.

Key changes from our discussions with the UCC, we've included language provide for a procedure for modifying consulting agreement, some notice and an opportunity to object. That's at paragraph 15. We also included language dealing with sensitive vendor information, what it can be used for, how it should be handled and so on. And we also included various notices consulting rights for the UCC. And we believe it would resolve all the UCC's formal comments. I don't know if we've gotten official sign off from them. So I'll give them up to me to speak up and say if they have anything left. Thank you, Your Honor.

Go ahead. Go ahead. Mr. I think we can provide formal approval of the form of order. Obviously, changes are made. We'd like to see them. But I think counsel is correct. We worked very closely to try to get some provisions modified and additions made to the order.

And the company's done that and we're appreciative of that. All right. Does anyone else wish to be heard with respect to the digital debtors motion? All right. Thank you. So I'm going to go ahead and grant final approval of the digital debtors motion, and I'll wait for any comments. I did have a chance.

Although yours was filed late, it was the first of the three orders that was filed for the hearing today. So I did have a chance to review yours. So I'm fine approving it. Obviously, this is the strategy that the debtors have, that the digital debtors has set forth. And I think it's supported by both the declarations of Mr. E as well as the declarations of Mr. Schilling. So with that, I'll approve it and I'll wait for the new order. All right.

Thank you, Your Honor. Thank you, Your Honor. For the record, Bethelman from Welke-Farong Gallagher on behalf of the global debtors. I think that brings us to item 1B on the agenda, which is the global debtors' store closing procedures motion for certain of their SACS off fifth and Neiman Marcus' last call stores. Like with the office digital business, this is a hearing for final approval of that motion. And since we were before you last time a couple weeks ago, I understand that store closings have gotten under way and everything is going smoothly on that front.

In connection with the interim hearing, Your Honor had admitted for exhibits into evidence at the time, including the Declaration of Mr. Mark Weinstein in support of the emergency motion, the store closing procedures themselves, and the consulting agreement with GA Retail Group. Your Honor had also taken judicial notice of the Declaration of Mr. Mark Weinstein in support of the first days on a background basis. And for all of those items, we would respectfully request that Your Honor enter the three items again into evidence

and then take judicial notice of the First Day Declaration once again. Does anyone object to me carrying the evidence from the interim hearing to the final hearing? All right. Hearing no objections, those exhibits will be admitted and I'll take judicial notice, Mr. Weinstein's. first aid declaration.

Thank you, Your Honor. And Mr. Weinstein is in the virtual courtroom, as is Mr. Schilling. Thank you, Your Honor. We also filed a form of final order on Wednesday evening at docket number 762, and we've worked hard with a number of parties since the interim order was entered to address their concerns, and we filed a revised form of order this morning at docket number 775. With these changes, I also believe that we are before you with a consensual form of order, but I'll of course let anyone chime in if they disagree.

The order seeks final approval of the relief granted on an interim basis a couple weeks ago, including authority to enter into and perform under the consulting agreement with GA Group, authority to conduct the store closing sales pursuant to agreed procedures, and then also seeking certain modifications of their customer programs. In addition, the order features three bonus and severance programs for non-insiders that had not been up for approval at the interim hearing. Bucket number one was an aggregate amount of up to $2 million for up to $475 employees of the closing stores.

Bucket number two is an aggregate amount of up to $3 million for up to $326 non-insider corporate employees that support the store closing functions. And bucket number three is an incentive bonus to be fully funded by a provider of augment merchandise that would be sold through the closing stores. On that last piece, Your Honor, I figured it might be helpful just to clarify for the record the terms of that last incentive program. The program has certain sales goals for each of the closing stores such that if the goals are achieved or exceeded, the store will qualify for a payout of certain incentives.

incentives bonuses, which would be allocated to employees that sell the augment merchandise at the conclusion of the store closing sales. Amounts would be determined based on their seniority. Although the global debtors and sales will pay the incentive bonuses, at the conclusion of the process, they will be fully refunded from the augment provider when the amounts are deducted from the amount that the global debtors owe that augment merchandise provider under their existing revenue sharing arrangement. Unless your honor has any questions for me or would like me to walk your honor through the changes

that we made to the form of order, we would respectfully request entry of the final order. I did look at the red line. I thought that was about it. Does anyone else wish to be heard with respect to the off-price store closing final order? Your Honor, Lorenzo Mareemar and Euse again on behalf of the committee. As with the prior order, we work very closely with the company to make modifications to the form of order, in particular recognizing that concession and consignment vendors have unique interests in their merchandise and wanting to ensure that their products weren't sold during the going out of business sales without their consent.

We also wanted to facilitate separate negotiations between the company and their vendors or individual vendors and individual landlords because they may not all have the same concerns. So that to the extent procedures need to be slightly modified to benefit a vendor or a particular landlord. That the company was free to do that. Obviously, we'd like consultation and notice, and the company agreed to that. So we're very appreciative, once again, for the modifications that were made to the order. All right. Anyone else wish to be heard with respect to? All right.

So I've reviewed the motion, obviously, in the order from the time of the interim. hearing and with the modifications and the lack of any objection, again, I think this is a proper exercise of the debtor's business judgment and I'm going to go ahead and approve it. So give me a minute since I can actually sign this order. All right, debt order has been signed and sent to Docton. Thank you very much, Your Honor. The final item on today's agenda is item 1C, which is the Global Debtors Store Clothing Procedure's motion for eight Saks Fifth Avenue stores and one Neiman Market store.

Your Honor may be wondering as well as a number of other parties in the virtual courtroom why we didn't just seek approval of this relief in a single motion a couple weeks ago when we were last before you. The rationale for closing the off-price stores in our last motion was very different than the rationale for closing these nine full-price stores. First, the debtors needed time to review their lease portfolio and create a targeted plan to further their restructuring efforts. Also, it was very important from a brand perspective to not shock the market with misleading

headlines that SACS was closing. That was certainly not what was happening and it continues to be true. Instead, thanks to the extraordinary efforts of the management team, the communications team, and frankly the entire enterprise that fuels SACS, we use the first month of the case to stabilize the businesses and begin rebuilding trust among the company's key constituents. Before I get too far along, I do want to seek admission of four exhibits into evidence. We filed a witness and exhibit list at docket number 755 on Wednesday, and we would seek

admission of the consulting agreement at docket number 755-5, the store closing procedures at 755-6, the declaration of Mr. Mark Weinstein in support of this motion, at docket 755-7 and the declaration of Mr. Schilling in support of the emergency motion at docket number 755-8. In addition, there is the declaration of Mr. Mark Weinstein in support of the first days again at docket number 755-1. And same to request, Your Honor, we would ask that the first four documents I noted be admitted into evidence and that the court takes judicial notice of Mr. Weinstein's declaration

that's background for the release requested. All right, so let's take one at a time. So with respect to 755-5, which is a consulting agreement, anyone object to the admission of the consulting agreement? Okay, hearing no objections that will be admitted. With respect to 755-6, which is the store closing procedures, Does anyone object to the admission of that exhibit? All right, hearing no objection that will be admitted.

With respect to 755-7, which is Mr. Weinstein's declaration, does anyone object to the admission of Mr. Weinstein's declaration as his direct testimony in connection with this hearing subject across the case? examination. All right. Here are no objections. That will be admitted as his direct testimony subject to cross-examination to the extent anyone wants to cross him.

And then 755-8 is Mr. Schilling's declaration in connection with this motion. Does anyone object to the admission of Mr. Schilling's declaration as his direct testimony in connection with this motion subject to cross-examination? Right. That will be admitted as this direct testimony. admitted as this direct testimony subject to cross-examination at the appropriate time and I will take judicial notice of the first day declaration that Mr. Weinstein filed earlier. So all the exhibits are admitted as direct testimony or for the truth of the matter of the

consulting agreement and the storm procedures. Thank you very much, Your Honor. Turning to the relief requested, the motion seeks authority for four points of relief. First, authority to enter into and perform under the consulting agreement with GA Retail Solutions LLC, a copy of which is attached as Exhibit 1 to the proposed form of interim order. Second, authority to conduct store closing sales pursuant to the proposed procedures that were just admitted into evidence and that are attached as Exhibit 2 to the proposed form of interim order. Third, approval of modifications to certain customer programs.

And then on a final basis, not for purposes of this interim order, authority to pay severance for non-insider employees. I'll skip over that last one since it's not up for consideration today. And the first three, Your Honor, should seem familiar based on what Your Honor approved a couple weeks ago. I do want to highlight a couple of key differences. First, we requested similar modifications to the customer programs as we did for the off-price stores. Unlike the prior motion though, we are not joined today by the SO5 digital debtors in that aspect of the motion. Also, there were some minor changes stemming from the fact that the programs here are different than they were for the off-price stores. Second, this motion seeks to preserve the ability to add stores to the closing list if the global debtors in their business judgment decide that doing so is in the best interest of their estate.

There are some procedures that are outlined in the motion, and I'm happy to walk your honor through that to the extent it's helpful. How much notice are you going to be giving of that? So, Your Honor, we will be seeking to provide seven days a notice prior to the commencement of the sales. We would file a notice on the docket that outlines the stores that we're seeking to add, the time frame on which the stores would be closing, any additional severance that we would seek to. that we would seek to pay in connection with those closing stores and any other material changes.

All right, thank you. Otherwise, Your Honor, this order reflects the changes that we negotiated over the past several days, constructively with the committee and other interested parties in the case in advance of the hearing, many of which appear in large part in the final order that Your Honor just entered. We did file an updated form of the order this morning at docket number 774, And I'd be happy to walk your honor through the changes, answer any questions you have, or proceed on the merits. Otherwise, we would ask. No, go ahead and proceed on the merits.

Thank you, Your Honor. With respect to the consulting agreement, the global debtors are seeking authorization to enter into the consulting agreement with Great American. The global debtors believes that this is a sound exercise of their business judgment. The consulting agreement contains market terms that were negotiated at arm's length, and we believe that the consultant is the right party for this job, given its extensive experience in conducting retail liquidation sales, including liquidations of luxury goods, as well as certain other aspects, as Your Honor is aware, of these particular cases. The agreement gives the global debtor's sufficient flexibility to control the process and maintain their brand relationship. On the store closing procedures themselves, the global debtors are seeking authorization of their proposed store closing sales for eight SAC Fifth Avenue stores and one Neman Market store on the terms of their proposed store closing procedures. This includes seeking customary relief from certain local and state laws that would restrict the conduct of those store closing sales, of course, subject to certain dispute resolution procedures. We're also seeking authority to abandon certain f-fess and e furniture, fixtures, and equipment

at closing stores that the debtors, the global debtors are not able to remove themselves. With respect to the customer programs, the global debtors are seeking to get approval of certain modifications to their customer programs relating to returns, gift cards, the use of credit cards, and their rewards programs. These changes were carefully thought through by the Global Debtors Management Team in an effort to provide finality to themselves while also giving customers an efficient grace period where possible. These changes are all imperative to preserving customer goodwill in order to maximize the value of the liquidation sales. And again, Your Honor, since severance is not on for this hearing, I will skip over that piece.

All right. Does anyone else wish to be heard with respect to the full store, the full line closing? Your Honor, just briefly, Lorenzo, Marinoosie, again, co-counsel for the official committee. The interim order reflects some changes requested by the committee. We're still, obviously, reserving rights until the final. The bigger issues are really around notice. The merchandise mix in these stores is very different from the other stores that are liquidating, and so you have a number of concession vendors and consignment vendors,

but concession vendors in particular that may in fact be the employer for employees at these locations. And so if the company determines that they want to close a store and a vendor has actual employees there, the vendors obviously would like more notice, not less notice, to advise the employees that they might be looking for other employment. I think we'll get there ultimately, and again, we encourage the company as they have done and with respect to the other motions as they did there, to negotiate side agreements where necessary and appropriate with other vendors and landlords to allow them to be accommodated

for their particular needs and they encourage that. I think, I'm confident, we'll get to a final order that works for the committee, but we're not quite there yet. Thank you, Your Honor. Anyone else wish to be heard? Your Honor, Simon Meyer from Tramondip the Walk. Can you hear me okay? I can hear you find.

Okay, Your Honor, I represent Utica Square Shopping Center. It is one of the SACs locations, the SACs location in Tulsa, Oklahoma. My client just received the motion, so we're still digesting it a little bit. However, an initial point, we're dealing with a lot of different contacts from SACs. And so what we would ask is if debtor's counsel could send us a single point of contact that has authority to negotiate and find the debtor on one of these side letter agreements, that would be very helpful because what we don't want to do is talk with the consultant or the consulting group and then get switched off to somebody else.

So if there's somebody with the debtors who could provide us with that information, that would be very helpful. Your Honor, Betsy Feldman, for the record, we'd be happy to. All right. Anyone else wish to be heard? In terms of a final hearing, do you want one in or do you want one in, or do you want one in, do you want one in a month from now? Your Honor, if possible to be heard sooner than a month, we would certainly appreciate that. No, no, I'm really just asking, okay. So let me just look at the calendar.

To the extent, Your Honor, has any availability of the week of March 2nd, perhaps? Yeah, that's exactly. That's what I'm looking at. Why do we do 1 o'clock on March 2nd? Thank you very much, Your Honor. We will upload the form of order with that date inserted. I can insert. If there's no changes to the order, I can insert that.

There are no changes to the order. All right. Hold on a second. All right. I have signed the order. Objection deadline the week before the 23rd of February and the hearing on March 2nd at 1st. o'clock so let me just I think it's been signed and sent to docketing thank you

your honor that concludes our agenda for the day all right anything further from anyone all right we'll be in recess too we'll be in recess too