Saks Fifth Avenue: Why the $100M Missed Payment Signals Bankruptcy

The news that Saks Global, the newly formed parent company of Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman, has reportedly missed a $100 million loan payment just days after its CEO Marc Metrick stepped down, sending shockwaves through the retail industry.

For many, this feels like the return of the “Retail Apocalypse,” but since I am always keeping an eye on bankruptcy trends, consumer spending, and the economy, it’s a cause for concern.

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

The 2025 Bankruptcy Surge: Businesses and Consumers

As we move into 2026, we must look back at 2025. Last year, we saw a staggering 15% year-over-year increase in total bankruptcy filings, with Chapter 7 liquidations hitting their highest levels since the 2010 post-recession peak. This wasn’t just a consumer phenomenon; corporate Chapter 11 filings surged by nearly 18%.

In my previous articles, I’ve often warned that bankruptcy is a lagging indicator, meaning bankruptcy is the last choice, not the first. So by the time bankruptcy is filed, the economic issues were at play long before, “the lag.”

The Current State of High-End Spending and Comparing it to the Economy

According to the latest data, high-income earners are finally joining middle-class consumers in a “retreat” from traditional material luxury. But if bankruptcies are surging for large corporations, small businesses, consumers, and farmers who recently received a federal bailout, and now luxury and high-end stores are facing a pull-back from high-income earners, then what does that say about the current state of the economy?

Why Saks Global (Saks Fifth Avenue) is the “Canary in the Coal Mine”

The situation at Saks Fifth Avenue and Neiman Marcus is a perfect case study of the financial chain reaction that ripples through the economy.

Missed Payments: Saks Global missed a $100 million loan payment on December 30, 2025. Now apply this situation to the average household. When the average consumer is defaulting on debt payments, that is a sign of financial struggles. If and when bankruptcy happens, it’s not immediate, hence “the lag” I keep referring to.

Inventory Stagnation: Because transactions at Saks and Neiman Marcus fell by double digits in late 2025, they are sitting on expensive inventory while struggling to pay vendors. Now think of the chain reaction and how it affects everyone down the line.

If Saks is the canary, the missed payment isn’t the collapse, not yet, but it is the silence in the cage that tells us the air is turning toxic.

The High-End Financial Hemorrhage (Missed Payments)

The retail apocalypse of 2017-2019 was driven by the rise of e-commerce, and the COVID-19 pandemic further accelerated the shift to online shopping. But when Saks acquired Neiman Marcus for $2.7 billion last year, while the intent was to enhance its luxury portfolio, they also inherited a mountain of debt. But this also shows how difficult, if not impossible, it can be to time business decisions.

Saks had no way of predicting the economic uncertainty we are currently facing from the yo-yo effect of the Trump tariffs, a labor shortage caused by immigration enforcement, inflation, the significant drop in tourism, and AI causing job disruption, resulting in “job hugging,” where employees stay in roles they dislike out of fear, further stagnating the labor market.

The “K-Shaped” Collapse

Luxury was always thought to be “recession-proof.” For example, if you lost 10% of your income, that could result in serious financial disruption, but if you are wealthy, 10% wouldn’t have an effect. So while the economic belief was that middle-market stores like JCPenney or Macy’s might struggle, the top 1% would keep the lights on at Bergdorf’s and other high-end retailers. That theory is failing.

Chapter 11: Survival or “Slow Motion” Liquidation?

If Saks Global moves toward a bankruptcy filing, it will likely be a Chapter 11 Reorganization. As a bankruptcy law professor, I often remind my students that Chapter 11 is a “breathing room” tool, similar to Chapter 13 for consumers. It would allow Saks to:

1. Reject Expensive Leases: They can walk away from underperforming locations without the massive penalties that would normally apply.
2. Cramdown Debt: Force creditors to accept less than 100 cents on the dollar.
3. Secure DIP Financing: “Debtor-in-Possession” loans would provide the immediate cash needed to pay vendors and keep the doors open. Unlike consumer bankruptcies, Chapter 11 allows Saks to manage ordinary operations without asking for permission at every turn, though the court still keeps a tight leash on major asset sales.

The Professor’s Take: What This Means for You

Whether it’s a retail giant or a household, the warning signs are identical.

The “Dashboard Light is Flashing Red”: Missing an interest payment is the ultimate warning light and it’s flashing red. Whether it happens to consumers or a major corporation, it’s a sign of financial struggles that have been taking place for some time.

The Debt Anchor: If you are borrowing to pay for previous borrowing, the math eventually wins, and not in your favor. We’ve all heard the saying “steal from Peter to pay Paul.”

The potential bankruptcy of Saks Fifth Avenue is a reminder that we are facing economic uncertainty. If a luxury empire can’t outrun its interest rates, the average consumer must be even more vigilant. It’s for this reason I’ve been saying now is not the time to get into more debt. I’ve used examples of the issues I face on whether to buy an expensive sit-down lawn mower or wait, even delaying the purchase of an RV port.

Analysts are predicting that high-end retail is facing a “Structural Reset,” but that is a term that also applies to individuals and the economy, as we should be careful moving forward with any major financial decisions.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. Paralegals and students who are buying single copies can do so via Amazon Books. To access my YouTube channel, click this link.

You can learn more about filing for bankruptcy and the bankruptcy petition via this link. Information on the bankruptcy court system, contact information for trustees, and your state’s exemptions can be found here. The federal bankruptcy exemptions are listed here. The latest version of the 341 Meeting of the Creditors can be found here.

You can find additional categories by clicking below or by using the search feature at the top of this page:

• Bankruptcy
• Insights & Analysis

Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.