Sears hires advisers to prepare bankruptcy filing

11 October, 2018, 06:44 | Author: Eric Barnett
  • Sears appears to be preparing for a long expected bankruptcy filing

"I don't think it is an immediate drive to bankruptcy, but clearly the options are limited", said David Tawil, president and co-founder of Maglan Capital, which follows distressed companies.

"The journey to running a member-centric company on a consistently profitable basis has taken far longer than we expected", Lampert wrote in a lengthy blog post. Neither Sears nor M-III Partners returned requests for comment.

Hedge fund manager Edward Lampert, who serves as Sears' chairman, CEO, largest shareholder, and biggest creditor, announced an attempt at restructuring the company's debt on September 24. Talks are under way to arrange debtor-in-possession financing for a bankruptcy filing that could come in the next few days, the source added.

A Sears special committee is weighing a prior offer from Chief Executive Eddie Lampert to acquire the retailer's Kenmore appliances brand and its home services business for as much as $480 million.

Shares of Sears, which traded as high as $144 over a decade ago, closed Tuesday at 59 cents, a sign that investors are bracing for a potential bankruptcy filing or restructuring. While the SPDR S&P Retail ETF (XRT) is up 6.5% year to date, and fellow department stores like Macy's (M), Kohl's (KSS), and Nordstrom (JWN) have climbed more than 30% since the start of the year, Sears has lagged-and how. Lampert's strategy has often involved keeping Sears afloat with loans. Lampert and his hedge fund own about 50 percent of Sears. The company owns roughly half of its real estate and has sold off most of its more valuable properties. In January, it had announced plans to shut down 39 other stores. That kind of liquidation would be especially hard for lower-tier malls and shopping centers hard-pressed to find tenants in low-demand areas.

Sears hopes Carr can be the salesman it needs to win over creditors.


However, Lampert wants to restructure the debt without filing for bankruptcy protection, because he views bankruptcy as risky for retailers, the paper said.

"This has been the slowest moving train wreck happening for literally years", Perkins added.

Typically at the point of bringing in advisers, a company is evaluating a range of alternatives, including other restructuring plans or the selling off of assets.

Sears, an icon of American retailing since the 19th century, has struggled to appeal to consumers in recent years, losing customers and financial strength in the process.

"It's sad, it's really sad to see the end of an era", Perkins said.

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