Sears said in its bankruptcy filing that funds will be available to pay unsecured creditors after the secured ones such as the banks are made whole.
Early Monday morning, Sears announced it had filed for Chapter 11 bankruptcy - which would allow it to reorganize and possibly reemerge from bankruptcy with some part of the business intact - and received commitments for $300 million in debtor-in-possession financing to carry through the bankruptcy period while it restructures its debt and reorganizes its business. However, the company now has too much debt and not enough shoppers. Sears faced even more competition from online sellers and appliance retailers like Lowe's and Home Depot.
Monday's announcement says 142 stores will close by the end of the years, leaving fewer than 500 open across the country.
"The company believes that a successful reorganization will save the company and the jobs of tens of thousands of store associates", Sears said in a statement.
The longtime American shopping mall anchor is trying to stave off a complete shutdown of not only Sears department stores but the Kmart stores it also owns.
The company filed for Chapter 11 protection from creditors with the U.S. Bankruptcy Court in White Plains, N.Y., and said Eddie Lampert is stepping down immediately as chief executive officer.
A trio of the company's top executives will now run the company. Sears opened its first store in 1925 in Chicago, and the Sears Tower in that city, now known as the Willis Tower, was the world's tallest building when it opened in 1973. Sears' stock has fallen more than 50% in the last five days to around 35 cents a share. Sears shares have traded under $1 for all of October ー a jarring price for a stock that hit an all-time high near $120 in April 2007, just before its fortunes began to turn. Only a handful of full Sears and Kmart stores remain in MI. He also called on the company to sell off $3.25 billion in real estate and assets.More news: Murdoch wants to replace Musk as chairman of Tesla
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The question now is whether a smaller version of the company that once dominated the American retail landscape can remain viable or whether the iconic brand will be forced out of business. Plus, in bankruptcy proceedings, the largest creditors become the owners of the new entity.
The most recent filing from Sears showed it had only $193 million in cash on hand as of August 4, the end of its last fiscal quarter.
The company sold 235 of its best stores for $2.7 billion to a Lampert-created company, Seritage Growth Properties.
But they will need to do better than previous year. That was an enormous shift for people who lived on farms and in small towns and made numerous goods they needed on their own, including clothes and furniture.
The plans, which remained in flux on Friday afternoon, would leave the fate of Sears' remaining roughly 250 stores uncertain, the sources said.
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.