Published: Mon, October 15, 2018
Markets | By Otis Pena

Sears To File For Bankruptcy, Several Stores To Close

Sears To File For Bankruptcy, Several Stores To Close

Sears has filed for Chapter 11 bankruptcy protection Monday buckling under its massive debt load and staggering losses.

Sears is planning to seek bankruptcy protection in NY as soon as Sunday night, though a court filing could slip into Monday, the sources added, asking not to be identified because the negotiations are confidential. At the same time, Lampert's ESL Investments Inc.is negotiating a financing deal while also discussing buying "a large portion of the company's store base", Sears said in a statement.

The operator of Kmart and Sears stores has already closed hundreds of locations and has put other famous brands on the block as it burns through money and sees more customers abandon its often-neglected stores.

Sears Chief Executive Eddie Lampert, also the company's largest shareholder and creditor, is exploring bidding on the assets as a so-called stalking horse, setting a floor with offers that other possible buyers could then attempt to top, the sources said. However, the company now has too much debt and not enough shoppers.

Being an unsecured creditor of Sears (SHLD) right now is not a good place to be.

"This is a company that in the 1950s stood like a colossus over the American retail landscape", said Craig Johnson, president of Customer Growth Partners, a retail consultancy.

"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", Lampert said.

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The company also announced Tuesday that it added a new member to its board of directors who is familiar with bankruptcies and restructuring: Alan Carr, CEO of the restructuring advisory firm Drivetrain.

Judge Robert Drain will oversee the bankruptcy, with Sears represented by the law firm Weil Gotshal & Manges, according to court documents.

"Over the last several years, we have worked hard to transform our business and unlock the value of our assets", said Edward S. Lampert, Chairman of Sears Holdings.

Lampert is now Sears' largest shareholder, with about half the company's shares.

A spokesman for Lampert declined to comment on details of the bankruptcy financing, while a Sears spokesman and spokespeople for the banks didn't immediately respond to requests for comment. Sears merged with Kmart in 2005.

The company's lenders are encouraging Sears to shut down and liquidate, the Wall Street Journal reported Thursday.

The Sears catalog eventually sold products ranging from hardware and automobiles to kits for building an entire house. He recently proposed selling off another $3.25 billion in real estate and assets, including Sears Home Services and the flagship Kenmore brand. Its had 11 years of straight annual drops in revenue.

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