Sears, the Amazon of its day, files for bankruptcy
Sears, the Amazon of its day, files for bankruptcy
Sears’ bankruptcy appears imminent
15 October, 2018, 18:28
The beleaguered 125-year-old retailer, once the largest in the United States, hopes to sell stores and other assets, including its Kenmore appliances brand and home services business, in court-supervised auctions while under bankruptcy protection, the sources said.
Sears' shares, which were over $100 each year after billionaire hedge fund manager Edward Lampert took over in 2004, closed at about 41 cents on Friday. "In our view, too much rot has set in at Sears to make it viable business".
The company listed $6.9 billion in assets and $11.3 billion in liabilities in documents filed in the U.S. Bankruptcy Court in the Southern District of NY.
Sears had a $134 million debt payment due Monday that it couldn't afford, prompting the bankruptcy filing. Lampert, who is Sears's biggest shareholder and will remain as chairman, acknowledged in the statement that turnaround efforts so far have fallen short. Mohsin Meghji, a managing director of the M-III Partners corporate advisory firm, was appointed chief restructuring officer.
Having so little cash available would make it very hard for Sears to pay back $134 million in debt due on Monday.
Keeping shelves full and sales stable could become a determining factor in avoiding liquidation and helping creditors determine whether they want to keep throwing money into the company.
The critical holiday season will be a particular challenge for Sears.
It's been a rough year for large brick-and-mortar stores, with Toys "R" Us failing to emerge from bankruptcy proceedings and closing all its stores. The original Kmart store in Garden City closed previous year.
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"ESL believes that supervision by a judge will enable creditors to address any issue among them according to a clear set of rules and permit the sale of certain assets through a court-approved auction process to maximize value", the fund said in a statement.
Seritage Growth Properties, part of a real estate investment trust spun off by Sears in 2015 with the leases on 230 properties operated by Sears or its Kmart division, is also 44 percent-owned by Lampert entities.
The company says in its release that it intends to continue payment of employee wages and benefits, honor member programs, and pay vendors and suppliers in the ordinary course for all goods and services provided on or after the filing date. Sears now has a store at the Huntington Mall, as well as smaller "Hometown" stores in Ripley, Gallipolis, Pikeville and South Williamson.
In this undated file photo, Ruth Parrington, librarian in the art department of the Chicago Public Library, studies early Sears Roebuck catalogs in the library's collection in Chicago.
It's also worth noting that Sears and Montgomery Ward were both disruptors of marketplaces in their own times. Founded in 1892, it was a USA retail juggernaut until the 1990s, when it started facing stiff competition from Walmart, Target and other more agile competitors.
The company was started by Richard Sears, a train station agent in Minnesota who began selling watches by mail in 1886, according to the company's website.
But while retailers typically file for bankruptcy with the intention of staying in business, many end up going bust after filing.
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