<\/p>\n
\n\tUpdated 4:12 p.m. ET March 31<\/p>\n
\n\tWhile Saks Global slunk toward bankruptcy in January \u2014 and hoped against hope that court might be avoided \u2014 some eagle-eyed observers worried the retailer wasn\u2019t moving quickly enough.\u00a0<\/p>\n
\n\tTurns out, it\u2019s expensive to run out of money.<\/p>\n
\n\tSaks Global is now hitting its benchmarks and is rapidly transforming its business under court supervision and a new management team. The company, which owns Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman, is setting itself up for a second, post-bankruptcy life focused first on being a retailer.\u00a0<\/p>\n
\n\tBut the professional fees for lawyers, bankers and more can pile up quickly. It is simply an expensive and difficult business and law firms that can handle a complex bankruptcy like Saks\u2019 don\u2019t come cheap. <\/p>\n
\n\tSaks Global\u2019s law firm, Willkie Farr & Gallagher, requested court approval for fees totaling $5.7 million. While it\u2019s hard to compare different cases, that is in line with fees charged in bankruptcies across industries.<\/p>\n
\n\tBut the retailer has already accessed more than $1 billion of its $1.75 billion in DIP financing, giving it enough money to operate in bankruptcy and cover the fees, which were accounted for in its DIP budget. <\/p>\n
\n\tWillkie Farr\u2019s bill covers work by a small army of lawyers from Jan. 14 through Jan 31. The full cost for all of February and March won\u2019t be revealed until later, although the legal work can be more intensive in the early part of a bankruptcy.\u00a0<\/p>\n
\n\tAll together, Willkie Farr billed for 3,572.8 hours at an average hourly rate of $1,842.58.\u00a0<\/p>\n
\n\tWhile some of the lawyers spent as little as 20 minutes on the case, the legal shepherding of Saks Global clearly took over the lives of others.\u00a0<\/p>\n
\n\tOne restructuring partner at Willike Farr billed $506,174.50 for 181 hours at $2,796.54.\u00a0<\/p>\n
\n\tAnother partner billed $454,632.50 for 219 hours at $2,075 an hour \u2014 that works out to more than 12 hours a day for two-and-a-half weeks straight.\u00a0<\/p>\n
\n\tSaks Global\u2019s bankers have been working away, too, although they don\u2019t have quite as much to do as the legal team. PJT Partners billed $92,903 for the two-and-a half weeks, detailing internal calls discussing Saks Global, email correspondence, review of materials and so on over a total of 770.5 hours worked.<\/p>\n
\n\tMore than expensive, or lucrative depending on which side you sit, bankruptcy is surely exhausting.\u00a0<\/p>\n
\n\tAnd it\u2019s been a marathon, not a sprint.\u00a0<\/p>\n
\n\tPrevious court filings showed Saks Global paid $32.2 million to Willkie Farr between June and the filing, covering bankruptcy and other expenses.\u00a0<\/p>\n
\n\tCount that as a small window into the incredibly complex world of bankruptcy, where a business\u2019 hard and confounding exterior is pulled back, its accounts are settled for better or worse and the details of its operations are laid bare before the law.\u00a0<\/p>\n
\n\tIn that vein, a separate filing on Tuesday detailed the February results of Saks Off 5th Holdings LLC, which houses the off-price business\u2019 e-commerce side.<\/p>\n
\n\tThe division, which operates as a stand-alone company, is being wound down now, but the financial snapshot gives a sense of just how the retailer found itself in dire straits.\u00a0<\/p>\n
\n\tThe digital business logged sales and other receipts of $24 million for February, but also paid out $14.7 million to cover principle and interest on its term loan as well as $3.4 million in intercompany disbursements.\u00a0<\/p>\n
\n\tSaks Off 5th\u2019s digital arm went into bankruptcy with $233.7 million in unsecured debt, owed primarily to vendors.<\/p>\n
#Saks #Globals #Costly #Bankruptcy #Journey #Legal #Financial #Strains<\/p>\n","protected":false},"excerpt":{"rendered":"
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