The Saks, Bergdorf Goodman, Neiman Marcus Bankruptcy Filing and the Case of the Missing or Incomplete Consignment Agreement

 The Saks, Bergdorf Goodman, Neiman Marcus Bankruptcy Filing and the Case of the Missing or Incomplete Consignment Agreement

Many clients have contacted my law firm explaining that they are in the jewelry business and shipped jewelry, diamonds, or other high-value items to Saks on a “consignment” basis.

When I ask for the Consignment Agreement, what I usually receive—if anything at all—is a receipt or invoice stamped “Consignment” in the upper right-hand corner.
I then ask for a copy of the UCC-1 financing statement and the PMSI notice sent to other inventory secured creditors, and I am often met with a glazed look and the response: “That’s not how it’s done on 47th Street.”

Unfortunately, in a Chapter 11 case, custom and practice do not trump the Uniform Commercial Code.

Under UCC Article 9, perfected consignments are treated as secured transactions.
If the consignment is not properly perfected, the goods are deemed property of the bankruptcy estate and are subject to the claims of the debtor’s other creditors including secured  inventory lenders, DIP lenders and the Bankruptcy Trustee.

The consignor, instead of being a secured creditor, is treated as a general unsecured creditor.

Article 9 does provide the consignor with a PMSI in consigned inventory—but only if it is properly perfected.

This generally requires filing a UCC-1 financing statement and sending timely PMSI notices, before delivery of the goods, with renewals every five years.

In Chapter 11, secured creditors are typically paid far more than unsecured creditors, making these steps critical.

Creditors involved with the  Saks, Bergdorf Goodman, Neiman Marcus bankruptcy filing with questions about the treatment of their claims or consignment agreements should contact 

Jim Shenwick, Esq.

 Please click the link to schedule a telephone call with me.

https://calendly.com/james-shenwick/15mPlease click the link to schedule a telephone call with me. 

https://calendly.com/james-shenwick/15min

Shenwick & Associates

116 Plymouth Drive

Scarsdale, NY 10583

Work: 917-363-3391

Bankruptcy & Creditor Rights

Currently Not Collectible (CNC) Status and Defaulted SBA Loans

 Currently Not Collectible (CNC) Status and Defaulted SBA Loans

“Currently Not Collectible” (CNC) status can, in limited cases, be used to temporarily pause collection activity on a defaulted SBA loan. 

CNC is not an SBA program and is not available immediately after default. 

It may only be requested once the loan has been charged off, assigned to the SBA, and referred to the U.S. Treasury or IRS for collection. 

At that stage, collection efforts may include the Treasury Offset Program, private collection agencies, or IRS cross-servicing. 

If the IRS is the active collector, a borrower may request CNC status by demonstrating financial hardship. 

To qualify, the borrower must show that there is no disposable income after basic living expenses. 

If approved, CNC may temporarily stop wage garnishments, levies, and aggressive IRS collection actions. 

However, CNC does not eliminate the SBA debt or stop interest from accruing. 

Tax refunds may still be intercepted, and the account can be reactivated if the borrower’s financial condition improves. 

Even with CNC status, the SBA retains the right to enforce guarantees and resume collection efforts in the future.

Borrowers or advisors with questions about defaulted SBA loans and borrower alternatives should contact Jim Shenwick, Esq

Jim Shenwick, Esq  917 363 3391  jshenwick@gmail.com

Please click the link to schedule a telephone call with me. https://calendly.com/james-shenwick/15min

We help individuals & businesses with too much debt!

Increased SBA and Treasury Collection Actions on Defaulted SBA Loans

 

 

At Shenwick and Associates, we regularly represent individuals and businesses facing financial distress, including borrowers who have defaulted on Small Business Administration (SBA) loans. Over the past several months, we have observed a marked increase in aggressive collection activity by the SBA and the U.S. Department of the Treasury against borrowers and guarantors of defaulted SBA loans.

 

Heightened Enforcement Activity in Late 2025 and 2026

Beginning in the last quarter of 2025 and continuing into 2026, collection efforts by the SBA and the Treasury have intensified. These efforts are not limited to letters or informal demands. Instead, we are seeing the government use a broad range of statutory collection tools, including:

• Retention of private collection agencies to pursue defaulted SBA loans;
• Administrative wage garnishment of up to 15% of a debtor’s wages, without the need for a court judgment;
• Seizure of federal tax refunds through the Treasury Offset Program; and
• Offset of Social Security benefits, with up to 15% of monthly payments taken from individuals who are personally liable for, or who guaranteed, SBA loans.
•  

These collection actions are being taken against both primary obligors and personal guarantors of SBA loans. If you signed a personal guarantee, your personal income and federal benefits may be at risk.

 

The “They Won’t Collect” Myth

We recently met with a new client who told us that their accountant had advised them: “Don’t worry about a defaulted SBA loan—the SBA isn’t really collecting on those loans.” Unfortunately, that advice is simply wrong!

 

Based on our recent experience and the increasing number of calls we are receiving, it is clear that the SBA and Treasury authorities are actively pursuing collection of defaulted SBA loans. Assuming that the government will not act is a mistaken and risky strategy that can result in wage garnishments, lost tax refunds, and reduced Social Security income.

Take Action Early

If you have defaulted on an SBA loan, or if you personally guaranteed an SBA loan that is now in default, it is critical to take proactive steps. Options may exist to address the debt, such as a mitigate collection efforts, or restructure or resolve the obligation, or a bankruptcy filing and or a payment plan with Treasry—but those options are often time-sensitive.

 

Consulting with an experienced bankruptcy and workout professional can make a meaningful difference in protecting your income, your retirement income and your financial future.

 

If you are facing collection activity related to a defaulted SBA loan, we encourage you to seek qualified legal advice sooner rather than later. For those clients or their advisors who have questions with respect to defaulted SBA loans, please contact Jim Shenwick, Esq.

 

Jim Shenwick, Esq 

917 363 3391 

jshenwick@gmail.com

Please click the link to schedule a telephone call with me.

 https://calendly.com/james-shenwick/15min

 

We help individuals & businesses with too much debt!