Iconic US retailer Sears files for Chapter 11 bankruptcy

Share

Sears, once the largest retail store chain in the United States, has filed for bankruptcy protection from creditors after 125 years of operations.

Coinciding with the filing, Edward Lampert, who engineered Kmart's $11 billion acquisition of Sears, is stepping down as CEO. He remains chairman. The company has appointed restructuring expert Mohsin Meghji, managing partner of M-III Partners, as its chief restructuring officer.

Sears Holdings Corp CEO Eddie Lampert has stepped in to contribute towards a financing package of between US$500 million and US$600 million that the U.S. department store operator was close to securing on Sunday (Oct 14) to fund operations during bankruptcy proceedings, people familiar with the matter said.

Yes. Sears and Sears.com remain open and loyalty programs, including the Shop Your Way membership program, warranties, protection agreements, layaways, and the Sears and private label credit card and credit rewards programs continue as normal.

The company has announced so many different store closures and liquidation sales in 2018 that it's been hard to keep an official Sears store closing list.

Lenders such as Bank of America, Citigroup and Wells Fargo will provide at least $300 million of what is known as "debtor-in-possession" funding to help keep as many Sears stores as possible open during the bankruptcy process.

The company been drowning in debt exceeding $5 billion and reportedly could not make a $134 million payment that had been due on Monday.

Lampert's hedge fund, ESL Investments, said it had consistently believed that restructuring the company's finances could have been best achieved outside a court-run bankruptcy process.

More news: The Russo Brothers Wrap on Avengers 4 Reshoots
More news: Kid Rock comes to White House as Trump signs royalty bill
More news: Will Smith reveals first post for Disney's 'Aladdin'

As part of the transition, Sears will also undergo a series of leadership and board changes. Lampert bought Sears in 2004 and merged it with Kmart, in which he had a controlling stake, the next year.

The last decade and a half of Sears' existence has been defined by hedge fund manager Eddie Lampert's control of the company, and the complex financial engineering strategies he has used around its retail business and its real estate and its still-valuable assets like the Kenmore appliance brand.

As of May, it had fewer than 900 stores, down from a 2012 peak of 4,000.

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

Sears Holdings had 89,000 employees as of February, according to a filing with the Securities and Exchange Commission - down from nearly 350,000 a decade ago - as well as 547 Sears and 432 Kmart stores.

The Sears catalog was the way many Americans first started to buy mass-produced goods.

The company has struggled with outdated stores and complaints about customer service. Total revenue dropped 30 percent in the most recent quarter, hurt by continued store closings.

Meanwhile, Sears workers are nervous about what kind of severance they'll receive if their stores close. Whereas with weekly sales and even events like Black Friday, shoppers have to sift through full-price merchandise to find the deals, Sears liquidation sales feature across-the-board discounts on all items - and even the store fixtures are on sale.

Share