Amazon has launched a forceful legal challenge against Saks Global Enterprises’ bankruptcy financing plan, arguing that the luxury retailer violated key commercial agreements and that Amazon’s equity investment in the business is effectively worthless. The dispute adds a high-profile technology player to an already complex Chapter 11 process, underscoring the tensions that can surface when strategic partnerships collide with distressed balance sheets.

Amazon Pushes Back on Bankruptcy Financing

In court filings submitted late Wednesday, Amazon objected to Saks’ proposal to secure up to $1.75 billion in debtor-in-possession financing to fund its Chapter 11 restructuring. Amazon argued that the financing would burden the retailer with billions of dollars in additional obligations while unfairly disadvantaging unsecured creditors, including Amazon itself.

According to the filing, the proposed funding structure would significantly dilute the value of existing claims and further impair Amazon’s position as both an investor and a commercial partner. Amazon described its equity stake in the bankrupt retailer as “presumptively worthless,” a stark assessment that highlights how rapidly the economics of the deal deteriorated.

The Equity Bet That Unraveled

Amazon’s involvement with Saks traces back to the luxury retailer’s $2.65 billion acquisition of Neiman Marcus. As part of that transaction, Amazon invested $475 million in preferred equity in Saks Global Enterprises, taking a minority stake intended to align incentives between the two companies.

That investment was not purely financial. It was tied to a broader commercial arrangement under which Saks agreed to sell products on Amazon’s platform through a dedicated “Saks on Amazon” offering. In return, Saks committed to paying referral fees and guaranteeing at least $900 million in payments to Amazon over an eight-year period, according to the court documents.

Amazon now contends that Saks failed to live up to those commitments, alleging repeated budget shortfalls, rapid cash burn, and hundreds of millions of dollars in unpaid invoices to retail partners.

A Retailer Under Severe Strain

Testimony from Saks’ chief restructuring officer, Mark Weinstein, painted a picture of a company running out of options. Weinstein told the court that without immediate access to new financing, Saks would be unable to pay vendors, meet payroll, or continue normal operations. The retailer is seeking approval to draw an initial $400 million, with additional funding becoming available later in the bankruptcy process.

Saks has said the financing arrangement—sourced from a group of existing lenders—would stabilize the business during restructuring. The company also emphasized that stores across all its brands remain open, seeking to reassure customers and suppliers amid the legal battle.

Consent, Conflict, and Control

A key point of contention is Amazon’s claim that Saks required its consent for a critical component of the proposed financing. Amazon said it refused to provide that consent and warned earlier this month that it would oppose the funding. Despite that, Saks proceeded with the lender-backed arrangement, setting the stage for the current courtroom clash.

For Amazon, the issue extends beyond a single investment loss. The company argues that the financing undermines contractual rights embedded in its partnership with Saks, raising questions about how strategic agreements are treated when a counterparty enters bankruptcy protection.

Broader Implications for Retail and Tech

The dispute highlights the risks inherent in hybrid partnerships that blend equity investment with long-term commercial commitments. For technology companies seeking deeper integration with traditional retailers, Saks’ Chapter 11 case may serve as a cautionary example of how quickly alignment can fracture under financial stress.

As a Texas bankruptcy judge weighs whether to approve Saks’ request to tap the financing, the outcome could influence not only creditor recoveries, but also how future retail-tech alliances are structured to withstand downturns. For now, Amazon’s aggressive stance signals that even powerful strategic partners may find themselves fighting for position when bankruptcy reshapes the rules of engagement.