Sears To File For Bankruptcy, Several Stores To Close

Sears To File For Bankruptcy, Several Stores To Close”

Sears Holdings, the parent company, which owns Sears and Kmart, is among dozens of prominent retailers to declare bankruptcy in the era of Amazon.

Sears Holdings ($SHLD) reached a deal with lenders over the weekend that will reportedly require it to shut almost 150 stores immediately as it reorganizes. Lampert, who himself is Sears' biggest creditor, may also provide additional funds through his ESL hedge fund although that will require legal approval. He remains chairman. The company has appointed restructuring expert Mohsin Meghji, managing partner of M-III Partners, as its chief restructuring officer.

Sears Holdings has filed for Chapter 11 bankruptcy and will close almost 150 stores by the end of the year, the iconic retailer announced Monday. But the retail landscape is littered with brands that tried to reorganize in the bankruptcy process and liquidated their businesses instead, such as RadioShack, Toys "R" Us and Sports Authority. But it faltered as discounters, specialty chains and online merchants wooed consumers away in recent decades, and it never seemed to find the niche that would keep them coming back.

But eventually, retail changed two more times, and Sears failed to be the company that saw either trend first.

Shares in Illinois-based Sears closed at about 41 cents on Friday, down from over $100 in the years after hedge-fund star Lampert, once hailed as another Warren Buffett, merged it with discount store Kmart in a $11 billion deal in 2005.

Buckling under pressure, the bankruptcy announcement comes ahead of a $134 million (£102 million) debt repayment due at the start of this week.

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. In a statement Monday, Whirlpool said it does not anticipate Sears' bankruptcy filing to have any impact on its full-year 2018 EPS guidance or financial results over the long term.

Parts of Sears have already been through bankruptcy.

Formed in 1886 by railroad station agent Richard Sears, the company started as a watch business in North Redwood, Minnesota.

Last year, Sears sold its famous Craftsman brand to Stanley Black & Decker Inc., following earlier moves to spin off pieces of its Sears Hometown and Outlet division and Lands' End. While other traditional retailers enjoyed strong holiday sales, Sears and Kmart both reported sharp drops. The original Kmart store in Garden City closed previous year.

Sears said it intends to continue payment of employee wages and benefits, honor member programs, and pay vendors and suppliers in the ordinary course for all goods and services provided on or after the filing date. In August, the company announced another 46 store closings. But the onset of discounters like Walmart created challenges for Sears that have only grown.

Meanwhile, Sears workers are nervous about what kind of severance they'll receive if their store closes.

At one Sears store liquidation sale a MONEY staffer visited recently, most clothes and shoes were 50% off regular prices. The company now has 506 stores in operation.

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