Sears To File For Federal Bankruptcy Today

Sears To File For Federal Bankruptcy Today

Its holding company filed for bankruptcy today just as a massive payment on its debt was due.

Sears has been closing stores and selling properties as it grapples with a debt load of more than $5bn.

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.

The plans, which remained in flux on Friday afternoon, would leave the fate of Sears' remaining roughly 250 stores uncertain, the sources said.

But it said that it's looking for a buyer for a large number of its remaining stores and that it will close at least 142 stores near the end of this year. CEO and primary shareholder Eddie Lampert told the company's board that it was crucial it restructure more than $5 billion it owes "without delay", according to a recent regulatory filing.

Hedge fund ESL says it stands by Sears' decision to file for Chapter 11 bankruptcy protection, though it would have preferred to avoid a court-run process.

Over the summer, a special board committee Sears created was resisting a rescue offer from Lampert to acquire assets from it, including its Kenmore appliance name.

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But they will need to do better than a year ago.

Last year, Sears sold its famous Craftsman brand to Stanley Black & Decker Inc., following its earlier moves to spin off pieces of its Sears Hometown and Outlet division and Lands End. 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. Mall economies haven't been very good lately anyway, and one has to wonder how many of those operators will need to get some bankruptcy relief if and when Sears collapses.

"The problem in Sears case is that it is a poor retailer", he wrote.

Sears' stock has fallen from about 6 United States dollars over the past year to below the minimum 1 USA dollar level that Nasdaq stocks are required to trade in order to remain on the stock index.

Sears revealed Tuesday night that investor Bruce Berkowitz of Fairholme Capital Management dumped 142,000 shares of Sears in the last few days, for only 59 cents to 65 cents a share. The company has said it's the nation's largest provider of home services, with more than 11 million service calls a year. Its mail-order catalogues with merchandise from toys, medicine and gramophones to automobiles, kit houses and tombstones made it the Amazon.com Inc of its time.

Sears' stores helped reshape America, drawing shoppers away from the traditional Main Street merchants. Sound familiar? And yet neither company could compete, either in catalog business or in the big-box retail model. For the healthy malls, landlords would welcome a Sears departure, allowing them to cut up the space and fill it with several smaller successful stores that combined would bring in higher revenue. The company recently announced another 46 store closings that will take place just before the start of the holiday shopping period.

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

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