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United States retailer Sears files for bankruptcy

15 Octobre 2018

For years, Sears has contended with the threat that it would become the latest big-name retailer to fall to online competition and crushing debt. The company's debts ballooned, leading to a credit crunch and its decision to file for bankruptcy.

Sears Holdings (SHLD), the parent company of Sears and Kmart, faces a Monday deadline to pay that much in debt. Mr. Lampert believes the company can reorganize around roughly 300 of the most profitable stores, a person familiar with his thinking said.

He could help finance his bids for the assets by forgiving some of the money Sears owes him, as opposed to putting in more cash, the sources have said.

Since 2012, Sears losses have topped $10 billion.

The long-awaited Sears bankruptcy is finally here. Big banks, including Bank of America Corp, Wells Fargo & Co and Citigroup Inc, are expected to provide significant portions of the financing, the sources added. Lampert, who is Sears's biggest shareholder and will remain as chairman, acknowledged in the statement that turnaround efforts so far have fallen short.

Sears was once the nation's largest retailer and its largest employer. It is unclear how the closures would impact Sears' nearly 70,000 employees. Sears merged with Kmart in 2005.

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.

The company expressed "substantial doubt" about its "ability to continue as a going concern" after failing to turn a profit since 2010, shedding brands like Craftsman and taking more than $800 million in loans from Lampert and his hedge fund, ESL Investments. Other creditors criticized the plan as a maneuver for ESL to extract value before insolvency hit.

The company's lenders are encouraging Sears to shut down and liquidate, the Wall Street Journal reported Thursday. With Sears heading toward bankruptcy, any potential for liquidation could mean an end to the lease agreements with Seritage.

A reorganization will keep rental income flowing but some locations are so valuable that outside investors could gain control of a site in an auction and not the REITs who are now Sears' landlords, Rothman said.

But outside the company, its insolvency was greeted as an ignominious shipwreck. Strong sales in the upcoming holiday season will be key in determining that.

Walmart also stands to benefit from an overlap in customer base and store locations, according to research from Cowen & Company. 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 bankruptcy court must greenlight this financing. Sears has closed hundreds of stores already in an effort to stay afloat.

In the next few years, Sears began spinning off parts of Allstate and Dean Witter, eventually distributing the rest to shareholders. Net sales rose 8% to $1.058 billion for the five weeks ended October 6, 2018.

United States retailer Sears files for bankruptcy