American court hearing recordings and interviews - Listen to the Saks bankruptcy court hearing of April 24, 2026

Episode Date: April 24, 2026

The podcast skips a couple of hearings held in the Saks bankruptcy proceedings earlier in April. The 4/24/2026 hearing is a helpful one to review because it includes an update on the restructuring support agreement and also an update on the anticipated timing of the chapter 11 disclosure statement. Additionally the hearing includes a summary of the proposed chapter 11 exit financing, with the business justification for the terms. At the conclusion of the hearing, the bankruptcy court approved the proposed exit financing, and the court noted another hearing is on for next Friday.

All right, good morning. It is Friday, April 24th, 2026. We're here for the 9 a.m. docket. Case number 26-9013, SACS Global Enterprises, LLC. When we get appearances and then we can proceed. Yes, good morning, Your Honor. Deborah Sinclair, we'll be far and Gallagher for the global gutters. Good morning.

Good morning, Your Honor, Bob Britton, Paul White. How about the Diplenders? Good morning. Good morning, Your Honor, Lorenzo. Sorry, Ms. Good morning, Your Honor. Gatsy Feldin from Miltesbara and Gallagher, also on behalf of the debtor. Good morning, Your Honor, Lorenzo Merritt using Morrison, Forster,

on the official committee of unsecured creditors. Good morning, Your Honor. Jerry Lee Miller at the Woffington on behalf of the funding company. All right, we're getting some background noise, so I'm going to activate the hand-raising feature, so hit 5-star, if you would. Conference, muted. Good morning, Your Honor. to Whitworth for the U.S. trustee. I'm standing in for my colleague, Hawain, this morning. All right. Good morning. All right. Any further appearances? Hit five star one time.

Okay, from the 619 area code. All right, Ms. Sinclair, are you leading us today? Yes, Your Honor. Again, for the record, Deborah Sinclair will be far for the global debtors. Your Honor, I first like to thank the court for its flexibility. I know we originally had this time scheduled for approval of our disclosure statement. We've had to move that hearing for a few days for a reason I'm happy to announce. Yesterday, the debtors, the ad hoc group, and the official committee of unsecured creditors reached an agreement in principle on a global settlement that we expect to resolve the issues of the UCC in this case. We do need a few more days to document that agreement, and we'll see, Your Honor, again, for a hearing on the disclosure statement on May 1. We're expecting that hearing to be largely, if not fully uncontested once this agreement is.

is memorialized. All right, thank you. We still would like to use today's time to go forward with the Simon status conference, as well as the hearing to approve our exit financing commitment letter. It pleases the court I propose we start with the Simon status conference and then I'll turn the podium to Ms. Solomon to address the commitment letter motion. All right, thank you. Go ahead.

So we're proud to announce some more good news on the Simon Fund as well as we're driving these cases to consensus. We now have a deal with Simon, subjectly. definitive documentation. As you know, Simon is one of the company's largest landlords, so this is really great news. That deal is also supported by the ad hoc group subject to the definitive documentation. That deal will resolve the litigation pending before the court regarding certain lease terminations, and it also provides go-forward solutions across the broader SACC-Simon real estate portfolio, which is going to help better align faxes go-forward business plan and

footprint. So we are working with the Sidley team to finalize documentation. We expect to file papers seeking court approval of a settlement under Rule 1919 within the next few days. We have, as I said, we do have the ad hoc group support subject to definitive docs. We've also shared the high-level terms of the deal with the committee. And I just want to note on the record that we'll continue to work with the committee as well to garner their support for the settlement. the deal that benefits all stakeholders because it's going to enable facts to continue a business relationship with one of our largest landlords and preserve value for the estate by cutting off litigation costs. So we'll make sure that the UCC sees all definitive docs as well. Right.

Good. Does anyone else wish to be? Yeah, before we turn it over, does anybody else wish to be heard by way of an opening statement, if you will? Hold on a second. I just unmuted a 504 number. Good morning, Your Honor, and Jerry Lee Miller said they're asked in on behalf of the Simon Property Group. We just want to echo everything Ms. Sinclair said. We are excited to have reached a deal subject to the definitive documentation.

Given that the docs are still, you know, not signed yet, and there's, you know, minor cleanup changes coming back and forth, which is a request as a formal matter that the status conference we reset to Friday on the extremely unlikely event something happens, but we very much appreciate. the better is working with us here and we're excited to have reached a settlement all right we'll just carry it to next uh the may first which is i guess the next sacks hearing perfect thank you your honor and there's no need to to we'll just make a notation uh on the docket you don't have to file a notice thank you your honor okay with that your honor unless you have any other questions about the sign and settlement or the uccd i would see the virtual podium to miss felman to

to present the motion on the commitment letter. No questions for me. Ms. Feldman. Thank you, Your Honor. Good morning for the record, Betsy Feldman from Wilkie Far and Gallagher on behalf of the global debtors. As Ms. Inclare noted, I'll be presenting the emergency motion

for approval to enter into and perform under the new capital commitment letter, which we filed on April 8th. On Wednesday, we filed a witness and exhibit list and we asked that the declaration of Mr. Baird in support of the motion at docket number, 1967-2 be admitted into evidence.

Mr. Baird is present in the virtual courtroom and available for cross-examination. All right. Does anyone object to the admission of the declaration of Mr. Baird has his direct testimony in connection with this matter? It's filed on the docket at 1862. And what exhibit number did you say it was? It's exhibit number two. Okay. And exhibit number two, does anyone object to the admission of his declaration as his direct testimony and connection with this matter subject to cross-examination?

All right. Hearing no objections that will be admitted. Thank you, Your Honor. This motion represents an important milestone in these cases. As your honor may recall earlier this month, the global debtors entered into an RSA with a significant majority of the ad hoc group. Concurrently, on April 1st, the Global Debtors entered into a commitment letter for exit financing, which is the subject of this motion. Together, the RSA and the Commitment Letter are the culmination of nearly four months of hard-bought negotiations for support for the Global Debtors reorganization and emergence from Chapter

11. Today, more than 94% of the ad hoc group has entered into the RSA, and approximately 83% are signatories to the commitment letter. The commitment letter, as this name suggests, provides the global debtors with a commitment of up to $500 million of incremental new money financing upon emergence from Chapter 11. Unless the court refers otherwise, I'd like to summarize the key economic points of the letter and briefly touch on the basis for the relief requested. Go ahead.

Great. Thank you, Your Honor. So first I'll start with a note about the form of the financing. The $500 million can take the form of debt or preferred equity. The commitment parties have until the earlier of May 15th and seven days before the confirmation hearing to decide which form the financing will take. Second, I'll note the new capital commitment obligations. Ask a question. So if it's preferred equity, how does the ratchet down work?

What do you mean, Your Honor? Well, apparently, the $500 million will go down if your liquidity is in excess. of 700 million at exit. And so if it's preferred equity, how does the ratchet downwork? Maybe this is a question for Mr. Britton. Yes, Your Honor. Again, Bob Britt and Paul Weiss on behalf of the dip lenders. So I think it's the same either way, Your Honor.

The minimum liquidity covenant is such that if the debtor's liquidity, which is a defined term of the point, it includes ABL, ABL availability and all of that, right? That's right. But to the extent it exceeds $700 million on the exit day, the amount of new capital that's put into the company would, you know, be a reduction from $500 million, regardless of whether the form of that new capital is debt or preferred equity. Okay. All right. All right. Sorry, Ms. Feldman. No problem. Thank you, Your Honor. The second point is the new capital commitment obligations themselves, of which there are three. The commitment premiums and then customary indemnification and expense reimbursement obligation. I'll pause really quickly on the commitment premiums themselves, which are equal to 17.5% of the financing, totaling 87.5 million. The premium is payable in only one of two forms, depending on whether the closing date occurs, meaning not both the closing date commitment premium and the commitment cash premium.

So with respect to the former, if the closing date occurs, the premium is paid in kind at the election of the majority commitment parties in the form of additional term loans or secured notes under the new debt facility, preferred equity of the reorganized debtors, and or common stock of reorganized debtors valued at a 20% discount to plan valuation. With respect to the latter, the commitment cash premium, if the commitments terminate or expire prior to the closing date, the company, must pay to 17.5 million percent premium in cash. I understood that. I think I understood that. I think I understood that. I'd like to pause on briefly. Go ahead.

Is the administrative super priority nature of these obligations. Importantly, all three, the commitment premiums, the expense reimbursement, and the indemnification obligations are agreed to be treated as allowed administrative expense claims with priority senior to all other admin expense claims other than the just super priority claims. Mr. Britton touched on the excess liquidity reduction, which I will also note for the record. So this provision is designed to ensure that the global debtors do not draw upon the committed financing in excess of what is actually needed at emergence. It provides that the $500 million is subject to a dollar-for-dollar reduction to the extent to commit the company's liquidity at emergence exceeds a threshold of $700 million. dollars.

I'd like to note for the record that this provision is value neutral. To the extent that projected liquidity exceeds the agreed threshold, it is because the states will have generated excess liquidity from their own operations, whether through access sales, available exit ADL capacity or cash on hand. In other words, every incremental dollar by which the funding is reduced is replaced by a dollar of independently sourced liquidity. This provision, I'll note, was particularly hard-fought in two key respects. First, we negotiated for a liquidity threshold of $700 million, which was materially improved

from early proposals. Second, the inputs for the formula for calculating liquidity were heavily negotiated. In particular, we negotiated for a waiver of the commitment cash premium if alternative financing emerges that the majority of the commitment parties consent to. Ultimately, Your Honor, we believe that this provision properly balances the global debtors need for funding and the commitment parties desire not to commit more funds than are necessary to ensure success post-emergence. As to the merits, Your Honor, I'd like to note two points.

First, entry into and performance under the letter is a sound exercise of the global debtor's business judgment. Section 363B of the Bankruptcy Code governs a debtor's decision to enter into financing of this type and pay related obligations. The case law is clear that use of estate property outside the ordinary course of business in this manner requires an articulated business justification. We clearly have that here, Your Honor. This was extensively negotiated at arm's length and in good faith, and numerous written terms

sheets for exchange, and the parties held multiple meetings. As is the case in every negotiation, the global debtors did not get everything they asked for, but the commitment letter represents the best terms on which the commitment parties were willing to lend. The global debtors proposed plan contemplates an equitization of the dip lender's dip claims, and if the plan is confirmed, the global debtors will emerge with just $500 million of term debt or preferred equity on their balance sheet. Not accepting the terms of the commitment letter would put this agreement into jeopardy.

Put differently, any alternative provider of exit financing would have had to be willing to commit enough cash to both refinance the gift and also for the gift. also fund emergence from Chapter 11. In light of that, the global debtors weighed the risk that not accepting these final terms would have left them without a commitment for exit financing and no real viable path to reorganization. Ultimately, the Special Committee of the Board, which comprises three independent members, approve the letter and the obligations under it. I'll note, again, Your Honor, with respect to the administrative and super priority treatment,

we believe that's warranted here because the new capital commitment officer, obligations are an actual necessary cost of preserving the estate because they represent the consideration required in exchange for the funding commitment. In other words, Your Honor, the plan can't go effective without the aggregate funding amount, the aggregate funding amount can't be obtained without the letter, and the commitment parties would not enter into the letter without this treatment of their claims, or really any of the terms in the letter. Your Honor, I will note that the global debtors have not received any opposition to this

motion, although the objection deadline was set for this hearing. So unless your honor has any questions, we would respectfully request that you approve entry into the amendment letter and its obligation. All right. Does anyone else wish to be heard? I don't have any questions. I did have an opportunity to review Mr. Baird's declaration as well as the motion. I do, and I do think under the circumstances, this is a proper exercise of the debtor's

business judgment. the debtor came into this case, very liquidity constraint. The biggest issue was the inability to provide merchandise for the stores. I think that the proposed funding and having liquidity in the hundreds of millions of dollars is a proper exercise of the debtor's business judgment, and I think it's a key cornerstone to this debtor being able to reorganize. I will approve the commitment. So give me a minute.

All right, that order has been signed and sent to Docketing. Anything further we can do today? Thank you, Your Honor. That concludes our agenda today. All right. We'll be in recess and we'll see you all next Friday. Thank you. Thank you.