A U.S. judge has rejected e-commerce giant Amazon’s (AMZN) first attempt to block Saks Global’s move into Chapter 11 bankruptcy by allowing the retailer to access short-term funding. Amazon argued that Saks broke a deal to sell its products on Amazon’s website. As a result, Amazon said that its equity stake in the retailer is now likely worthless. Still, after a long 7.5-hour court hearing, Saks was approved to draw about $400 million in emergency cash, although it will have to return to court soon to seek final approval for a much larger $1.75 billion financing package.
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At the same time, Amazon and other creditors have not given up and can still challenge the loan terms in the weeks ahead. Amazon warned that the financing would load Saks with billions in new debt and could hurt unsecured creditors like itself. Interestingly, this dispute goes back to a 2024 deal in which Amazon invested $475 million in preferred equity to support Saks’ $2.65 billion purchase of Neiman Marcus, while also securing a deal for “Saks on Amazon” that was supposed to bring at least $900 million in payments to Amazon over eight years.
However, as Saks’ financial problems became worse, tensions grew between the two companies. Amazon accused the retailer of missing budgets, burning through cash, and piling up unpaid bills, while Saks’ restructuring chief told the court that the company urgently needs funding just to keep paying staff and suppliers. Without it, he warned, the business would quickly collapse. Even though Amazon says it never approved part of the loan, Saks moved forward with backing from its existing lenders, saying that the financing is necessary to keep its stores open during the bankruptcy process.
Is Amazon a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 46 Buys and one Hold assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMZN price target of $294.69 per share implies 23% upside potential.
