A US bankruptcy judge on Wednesday granted initial approval of Saks Global’s bankruptcy financing, allowing the company to draw on $400 million in new cash despite an objection from Saks’ estranged business partner Amazon.

US Bankruptcy Judge Alfredo Perez approved the financing at a court hearing in Houston, saying the money would give Saks a chance to stabilise its business and restructure its debt. Saks’ chief restructuring officer Mark Weinstein said ⁠during the hearing that the company would be “dead in the water” without the new money, which would be used to pay vendors and the company’s 17,000 employees.

The luxury retail company filed ⁠for bankruptcy late Tuesday with $3.4 billion in debt, after its ill-fated merger with Neiman Marcus caused cash shortfalls that prevented Saks from reliably replenishing inventory at its stores. Saks Global’s attorney, Debra Sinclair, said all the stores remain “open for business,” and that Saks has no concern about weakening customer demand.

“The customers are ‍there, and we ‌know this because when we do have goods available in our stores, we are able to sell them,” Sinclair ⁠said. “The problem that you’ll hear a lot ‌about today and over the course of this week has been that we have not been able ‌to buy enough inventory to meet our demand.”

The $400 million infusion approved by Perez is the first tranche of a total financing package that Saks values at $1.75 billion.

Before approving the bankruptcy loan, Perez overruled an objection by online retail giant Amazon, which said its $475 million equity investment in Saks would become “worthless” if the bankruptcy proceeds with ‍the current financing arrangement.

Amazon has “little to no confidence” that Saks can successfully emerge from bankruptcy, Amazon’s attorney Caroline Reckler said at the hearing. Amazon’s attorneys argued that the new loan improperly claimed Saks Fifth Avenue‘s flagship Manhattan store as collateral, ‌when that property’s value had already ⁠been ​used to guarantee up to $900 million in payments owed to Amazon for its ⁠collaboration on a “Saks on ​Amazon” online sales platform.

In addition to approving the bankruptcy financing, Perez also approved several routine requests to help Saks avoid business disruptions during its bankruptcy, such as allowing the company to catch up on late payments to vendors who ​provided goods and services to Saks before it filed for Chapter 11 protection. Saks said it owes over $337 million to critical suppliers, including French luxury brand Chanel, which is owed $136 million, and Gucci ⁠owner Kering, owed $26 million.

Long loved by the rich and famous, ⁠Saks never fully recovered from the Covid pandemic, as competition from online outlets rose, and brands started selling more items through their own stores. The company’s vendors began withholding inventory last year after Saks fell behind on payments.