United States retailer Sears files for bankruptcy

US retailer Sears files for bankruptcy

Sears, the Amazon of its day, files for bankruptcy

As of Friday afternoon, the company and its creditors were still hammering out the details of a bankruptcy plan.

But rents have risen in the best locations and a bankruptcy like Sears poses an opportunity for landlords to refresh their properties with new or better tenants, provided they win control of the sites during Chapter 11, which can be complicated. Negotiators are discussing a loan of about $300 million to $500 million.

The largest USA toy retailer, Toys "R" Us, tried to emerge from its 2017 bankruptcy filing but was forced to liquidate six months later after creditors lost confidence in its turnaround plan.

In a statement released by the Sears, the company is looking for a buyer for its remaining stores. That scenario would see Sears auction off most of its assets.

Sears said it will sell assets and begin closing 142 unprofitable stores by year-end with the aim of reorganizing around a smaller platform of around 700 of its best stores.

Lampert, who had led the Illinois-based company since 2004, will step down as CEO as part of the reorganization but will stay on as chairman of the board.

Chicago's Sears Tower was the world's tallest building when it was completed in 1973, but in the following decades consumers increasingly turned to e-commerce and brick-and-mortar rivals such as Walmart and Target.

The company had 89,000 employees as of February, according to a filing with the Securities and Exchange Commission - down from around 350,000 a decade ago. In the last two years alone, it closed more than 725 Sears and Kmart stores nationwide. In either scenario, Sears would probably jettison its pension obligations, with the government's Pension Benefit Guaranty Corporation taking over the liabilities. It has been run over that period by the hedge fund manager Eddie Lampert, who sold off numerous firm's brands and properties but failed to win customers back, many of whom now prefer to shop online.

In September, Lampert - Sears' largest shareholder and creditor and the owner of the hedge-fund ESL Investments - asked creditors to refinance $1.1 billion in debt before the October 15 payment, according to a filing with the Securities and Exchange Commission.

No. Sears says it will make every effort to ensure a timely delivery for your order. Other creditors criticized the plan as a maneuver for ESL to extract value before insolvency hit. Sears merged with Kmart in 2005. With Sears heading toward bankruptcy, any potential for liquidation could mean an end to the lease agreements with Seritage.

Sears dates back to the late 1880s.

But outside the company, its insolvency was greeted as an ignominious shipwreck.

At its peak in the 1960s, 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.

All signs point to a bankruptcy filing in the next few days. The victims are the thousands of people who lost their jobs. The bankruptcy court must greenlight this financing.

The retailer's problems have mounted in recent years.

Lambert was quoted in the company's announcement as saying, "The Chapter 11 process will give Holdings the flexibility to strengthen its balance sheet, enabling the Company to accelerate its strategic transformation, continue right sizing its operating model, and return to profitability".

One of the biggest prizes could be appliances, a category where Sears was still a major player and was on pace to generate $3.5 billion in sales this year, according to UBS Securities.

Latest News