Sears files for Chapter 11 bankruptcy

15 October, 2018, 15:30 | Author: Eric Barnett
  • Sears, once the largest retailer in the world, is closing hundreds of stores and reportedly planning to file for bankruptcy. Here's how it got there.

The company began as a mail order catalogue in the 1880s, featuring items from bicycles to sewing machines to houses.

Sears Holdings' executives and lenders are supposedly negotiating over the fate of the long-standing, much-beleaguered retail chain.

The bankruptcy, which Sears said would help it to restructure its business, comes after years of decline.

Chapter 11 bankruptcy protection postpones a United States company's obligations to its creditors, giving it time to reorganise its debts or sell parts of the business.

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. But with its sheer colossal size, Sears' reorganisation in court will have even wider ripple effects. Embattled CEO Eddie Lampert will step down, but remain as chairman.

At its peak, 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. Those include Sears Home Services and the company's flagship Kenmore brand, which Lampert offered to buy in August for $400 million.

It is also weighing the sale of "a large portion" of its stores and said they could be bought by Lampert's hedge fund in a bankruptcy auction. In said in a statement Monday it had proposed as recently as September a strategic plan that would include selling assets, including those ESL was seeking to purchase. In April 2007, shares were trading at around 141 U.S. dollars.

Sears and Kmart had 89,000 employees as of February 3 of this year, according to a company filing.

Sears hasn't earned a profit since 2010. The company has said it's the nation's largest provider of home services, with more than 11 million service calls a year. 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.

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. Total revenue dropped 30 per cent in the most recent quarter, hurt by continued store closings.

Sales at the companys established locations tumbled almost 4 percent during its fiscal second quarter.

"We're doing the job of two to three people". "Were lifting treadmills and refrigerators".

Parts of Sears have already been through bankruptcy. Many of these malls already have had difficulty filling in the void from J.C. Penney and Macys closures.

"The problem in Sears case is that it is a poor retailer", he wrote. "Under benign conditions, this would be problematic enough but in todays hyper-competitive retail environment it is a recipe for failure on a grand scale".



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