Sears Files for Chapter 11, Swamped by Plunging Sales, Massive Debt

Alicia Cross
October 15, 2018

Sears Holdings Corp (SHLD.O) CEO Eddie Lampert has stepped in to contribute towards a financing package of between $500 million (382 million pounds) and $600 million that the US department store operator was close to securing on Sunday to fund operations during bankruptcy proceedings, people familiar with the matter said. But any movement toward bankruptcy seemed to gain momentum last week with reports that Sears had hired New-York based M-III Partners to prepare the filing.

Sears has not yet announced the locations of those 142 stores, however, a release says they are expected to shut their doors by the end of the year.

Sears, once the largest retailer in the United States, hopes to sell stores and other assets, including its Kenmore appliances brand and home services business, in court-supervised auctions while under bankruptcy protection, sources have previously said. But it wasn't able to keep up with shifting consumer habits as online rivals siphoned off shoppers, and turnaround efforts were hobbled by mountains of debt.

In July, Sears closed its last store in Chicago, once its hometown.

Being an unsecured creditor of Sears (SHLD) right now is not a good place to be. "While we have made progress, the plan has yet to deliver the results we have desired, and addressing the Company's immediate liquidity needs has impacted our efforts to become a profitable and more competitive retailer".

According to the release, the now-former CEO Edward Lampert will remain Chairman of the Board.

Lampert reportedly has visions of leaving 300 of Sears most profitable locations open. Many employees and analysts blame CEO Eddie Lampert for the retailer's decline.

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At its peak, Sears sold everything from toys to auto parts to mail-order homes, and was a key tenant in nearly every big mall across the United States. Sears recently added a restructuring expert as a company director for an additional layer of guidance on how to navigate a bankruptcy filing.

The latest plan would involve closing some of the 866 stores immediately, although it isn't clear how many.

If Sears does file for bankruptcy, it could try to stay in business, using the court process to shed debt and unaffordable leases.

Sears said in a statement: "The company expects to move through the restructuring process as expeditiously as possible and is committed to pursuing a plan of reorganisation in the very near term as it continues negotiations with major stakeholders". Mr Lampert personally owns 31% of the company's shares.

The Sears catalogUE eventually sold products ranging from hardware and automobiles to kits for building an entire house.

At the start of August, there were 866 Sears and Kmart stores.

"There was a time when Sears was the Amazon of its day". It has had 11 years of straight annual drops in revenue.

Other reports by Free-Prsite

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