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New York, NY--Saks Off 5th Digital has begun going-out-of-business sales after a bankruptcy court approved the liquidation of the online discount unit, according to The Sun.

[Image via iStock.com/vaeenma]

The liquidation is part of Saks Global's Chapter 11 bankruptcy process, which began January 14. Under the court-approved plan, Saks Off 5th Digital will sell its inventory separately and hire a liquidator. The sale does not include merchandise from Saks Global's physical stores, bankruptcy attorney Michael K. Riordan said in court, according to the report.

Discounts of up to 85% are being offered during the liquidation, the report stated.

Court documents cited by The Sun show that Saks Global owns 80% of Saks Off 5th Digital, with the remaining 20% held by outside investors, including Insight Partners. Andrew Hede was appointed as an independent manager and chief restructuring officer to oversee the process because the digital unit may owe money to its parent company.

The report noted that the liquidation partially reverses the 2021 separation of Saks' online and brick-and-mortar operations. At the time of the split, Insight Partners led a $200 million investment in the e-commerce business.

According to court filings cited in the report, Saks Off 5th Digital struggled with high infrastructure and digital marketing costs that failed to generate expected returns. Saks Global filed for bankruptcy citing at least $3.4 billion in debt and limited liquidity, the report said.

Despite the liquidation of Saks Off 5th Digital, Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman, and physical Saks Off 5th stores will continue operating during the bankruptcy process, the report added.

Read the report by The U.S. Sun here.