By Jamie Averch.
You have probably noticed the prominent signage at Saks Fifth Avenue in Phoenix’s Biltmore Fashion Park, or viewed online advertisements stating, “Everything up to 80% off – Saks Fifth Avenue Liquidation Sale.” Initially, this appears to be an attractive offer for luxury consumers. However, the term “liquidation” serves as a warning sign indicating potential financial difficulties. Founded in 1925, Saks has traditionally been a staple of premium American luxury retail. Currently, its parent company, Saks Global, is undergoing Chapter 11 bankruptcy proceedings after its $2.7 billion acquisition of rival Neiman Marcus in December 2024. The merger resulted in $3.4 billion in debt, leading to closures, including Saks’ only Arizona store.
Chapter 11 Bankruptcy Framework
Chapter 11 is a provision within the United States Bankruptcy Code that permits a corporation to reorganize its financial affairs while maintaining its operations rather than ceasing operations and liquidating assets, as would occur under Chapter 7 proceedings. Chapter 11 is often used to restructure companies, but it can also be used in liquidations (or partial liquidations). At this juncture, it is unclear whether Saks Global will successfully reorganize. We do, however, know one thing for certain: the Saks store in the Biltmore will not reopen.
Saks Global filed for Chapter 11 bankruptcy on January 14, 2026, in a federal court in Texas, reporting estimated assets and liabilities between $1 and $10 billion. Subsequently, the court approved $1.75 billion in “debtor-in-possession” financing, a specialized loan that enables the company to meet its financial obligations and remain operational during the proceedings.
A fundamental legal provision discussed in Chapter 11 proceedings is 11 U.S.C. § 365, which authorizes a debtor to select which leases and contracts to retain or abandon. For commercial leases, the debtor typically has a 120-day period, extendable under certain conditions by up to 90 days, to make its business decision. To keep a lease through “assuming” it, the debtor must cure any unpaid amounts and demonstrate the capacity to remain current in future payments. Conversely, if the debtor opts to “reject” the lease, it relinquishes its rights to the leased premises.
In this context, Saks has elected to reject the lease for its Biltmore Fashion Park store because it no longer aligns with strategic business interests. Furthermore, Saks is in the process of closing seven additional Saks Fifth Avenue locations nationwide.
Liquidation Sales and Biltmore Closure
“Liquidation” of a store is an attempt to sell as much inventory as possible, as quickly as possible, typically at significant discounts. Indeed, Saks may use inventory from other stores (or from third parties) to sell in the store being liquidated. The objective is to convert inventory into cash prior to the store’s permanent closure. At Biltmore Fashion Park, this process is currently underway at the approximately 92,000-square-foot Saks store, which has served as an anchor tenant since 1995. The store is projected to cease operations by late April 2026, resulting in the termination of 67 employees.
Once the Biltmore store ceases operations, Arizona will no longer host a Saks Fifth Avenue location. Additionally, the outlet stores operating under the Saks Off 5th brand are also diminishing, resulting in fewer in-person retail options for Arizona residents seeking Saks products. For consumers, this presents short-term opportunities for discounted purchases during the liquidation sale but a long-term diminution of a well-known luxury retail presence within the local market.
Anchor Tenant Ripple Effects
Saks is not merely another store at Biltmore Fashion Park. Rather, it serves as an anchor tenant. Anchor tenants are prominent, well-recognized stores that attract customers to a shopping center and stimulate traffic to smaller shops and dining establishments. The departure of an anchor tenant typically has a ripple effect, influencing the entire property.
Many shopping center leases incorporate “co-tenancy” provisions that protect smaller tenants in the event of the closure of a principal store such as Saks. These provisions may permit tenants to pay reduced rent or terminate their leases if the shopping center loses one or more anchor tenants, thereby reducing overall foot traffic. The closure of Saks at the Biltmore location could activate these provisions, exerting pressure on the landlord’s rental revenue and potentially prompting other tenants to renegotiate their lease terms or vacate the premises.
The owner of Biltmore Fashion Park, RED Development, appears to be moving quickly to mitigate associated risks. The company has already announced several new tenants, including Free People Movement and other retail and wellness brands, and is actively undertaking property updates. Although A.R.S. § 33-341 et seq. generally governs Arizona commercial leases, federal bankruptcy law governs the principal matters, particularly concerning the timing and procedures for rejecting the Saks lease.
Community and Future Outlook
For Saks, Chapter 11 bankruptcy serves as a strategy to raise cash, reduce debt, and discontinue operations at underperforming locations, with the goal of reorganizing and continuing operations at its more profitable locations. Saks’s demise reflects the increased debt and liabilities associated with the acquisition of Neiman Marcus, as well as intensifying competition from online retail and shifting consumer habits. For Biltmore Fashion Park, the insolvency necessitates a strategic recalibration. The shopping center is pivoting towards a diverse combination of retail, wellness, dining, and social spaces, moving away from the conventional department-store-centric model.
As RED Development works to reinvent the space with new tenants and atmospheres, a broader question arises: Will this bankruptcy invigorate Arizona’s retail landscape, or does it signal the onset of a gradual withdrawal of luxury stores in the region? One thing is certain: While liquidation notices continue to appear, the story of Phoenix retail is still being written.
Jamie Averch is a second-year law student at Sandra Day O’Connor College of Law at Arizona State University. She holds a Master of Science in Law and a Master’s in Sports Administration from Northwestern University. Her legal interests include data privacy, bankruptcy, and commercial litigation, with a focus on how law shapes and responds to evolving business and regulatory challenges. Jamie has experience working with both law firms and the judiciary, and she enjoys exploring the intersection of technology and the law through research and writing.