Iconic US retailer Sears files for Chapter 11 bankruptcy

Iconic US retailer Sears files for Chapter 11 bankruptcy

Sears Holdings Corp CEO Eddie Lampert has stepped in to contribute towards a financing package of between US$500 million and US$600 million that the United States department store operator was close to securing on Sunday (Oct 14) to fund operations during bankruptcy proceedings, people familiar with the matter said.

Whirlpool, which had started in business more than a century ago selling its appliances at Sears, pulled its various brands out of Sears and Kmart stores in 2017. Sears and Kmart stores grew barren and rundown.

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

Lampert is also exploring bidding on the assets as a so-called stalking horse bidder, setting a floor with offers that other possible buyers could then attempt to top, Reuters reported last week.

Sears listed assets in the range of US$1 billion (RM4.16 billion) to US$10 billion and liabilities in the range of US$10 billion to US$50 billion, according to a court filing.

Under the bankruptcy plan, Lampert's executive role will be replaced by a three-person committee, though he will remain as chairman of the board.

According to Bloomberg, Sears could declare Chapter 11 bankruptcy as early as Sunday, as the October 15 maturation date of a $134 million debt package looms large.

While we have made progress, the plan has yet to deliver the results we have desired, and addressing the company's immediate liquidity needs has impacted our efforts to become a profitable and more competitive retailer.

According to the plan, Sears Holdings will close 142 unprofitable stores near the end of the year.

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In July Sears closed its last store in Chicago, once its hometown. The company said it is continuing to pay employees' wages and benefits and is working with its vendors to ensure its shelves remain stocked.

The company said it meant to reorganize around a smaller store platform, a strategy it said would help save tens of thousands of jobs. It has been run over that period by the hedge fund manager Eddie Lampert, who sold off numerous firm's brands and properties but failed to win customers back, many of whom now prefer to shop online.

Sources told Reuters over the weekend that Lampert was expected to contribute towards a financing package of between $500 million and $600 million. In its heyday it was both the Walmart and Amazon of its time.

In 2008, the company employed 302,000 people, but that figure has fallen to just 68,000, according to the New York Times.

With the overall brick-and-mortar business also struggling, Kmart-controlled by Lampert's firm, ESL Investments-acquired Sears in a $12 billion merger in 2005. He recently proposed selling off another $3.25 billion in real estate and assets, including Sears Home Services and the flagship Kenmore brand.

The company sold 235 of its best stores for $2.7 billion to a Lampert-created company, Seritage Growth Properties.

But while the retailers typically file for bankruptcy with the intention of staying in business, numerous retailers end up going out of business after filing.

The filing in federal bankruptcy court in NY came just after midnight early hours of Monday.

"When you go into a bankruptcy, you're living in a fish bowl and every transaction will be looked at and examined", said Corali Lopez-Castro, Managing Partner at law firm Kozyak Tropin & Throckmorton.

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