In a recent article for Law360, Thompson LLP founding partner Ben Thompson examines the bankruptcy of Saks Fifth Avenue following its acquisition of Neiman Marcus, using the transaction as a case study to explore a broader shift in today’s M&A environment: capital structure discipline is once again driving deal outcomes.
In “Saks’ Post-M&A Bankruptcy Illustrates Current Market Risks,” Thompson explains how sophisticated investors, strategic capital partnerships, and anticipated commercial synergies cannot override the legal and financial mechanics that govern recoveries in distress. When liquidity tightens, outcomes are determined not by strategic intent, but by capital hierarchy, intercreditor dynamics, and the enforceability of contractual rights.
Key themes explored in the article:
- Why strategic capital does not alter bankruptcy priority rules
- How layered commercial relationships can fracture under stress
- The risks of leverage in a tighter refinancing environment
- Why boards and sponsors are refocusing on downside modeling and covenant flexibility
- How intercreditor agreements and liquidity runway are becoming central to deal design
As Thompson notes, optimism lives in the business plan, but risk lives in the structure. In a market defined by higher financing costs and constrained credit conditions, resilience must be built into transactions at the outset.
In our work with clients, we’re seeing heightened scrutiny around leverage, covenant flexibility, and downside protections as boards and sponsors prioritize structural resilience alongside strategic growth. For companies navigating acquisitions, refinancings, or strategic investments this year, disciplined deal structure is proving just as critical as the business thesis itself.