Economy

Sears hires advisers for bankruptcy filing

Sears hires advisers for bankruptcy filing”

"The problem in Sears case is that it is a poor retailer", said Neil Saunders, Managing Director of GlobalData Retail, in a Tuesday research note, where he wrote that he wasn't surprised the retailer was preparing for a possible bankruptcy filing.

The long-troubled iconic retailer has been working with M-III Partners to prepare what may appear to be a prepackaged bankruptcy filing that could come as soon as this week, according to a Wall Street Journal report. Spokespeople for Lampert and Sears declined to comment.

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. CNBC earlier reported that the company was arranging a bankruptcy loan, known as debtor-in-possession financing.

Sears continues to discuss other options and could still avert an in-court restructuring, the people added. Seritage Growth Properties, which has master leases on 230 Sears stores, slid 4 per cent, CBL & Associates Properties lost 1.1 per cent and Pennsylvania REIT was down 0.5 per cent. Lampert is the company's biggest shareholder. Lampert bought Sears in 2004 and merged it with Kmart, in which he had a controlling stake, the next year.

A Sears special committee is weighing a prior offer from Lampert to acquire the retailer's Kenmore appliances brand and its home services business for as much as $480 million. Sears wants to reduce its debt load by 80%, hoping creditors will bite at the chance to make a deal while the company is still a going concern.

Lampert himself has had a controversial tenure as chief executive. Sears now has 529 stores. Lampert and his hedge fund own about 50 percent of Sears.

Matt Kopsky, an analyst at Edward Jones, noted that Sears has not turned a profit since 2010 and that it has already sold off a majority of its brands, including Craftsman tools. In January, it had announced plans to shut down 39 other stores.

Were Sears to liquidate, the remaining stores - which average roughly 140,000 square feet - would flood the market with "a lot of empty boxes", Kopsky said.

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

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. "That is a real risk that we saw happen with Toys "R" Us," said Sandy. "Maybe it's the phoenix rising from the ashes, but we'll see".



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