US retailer Sears files for bankruptcy

US retailer Sears files for bankruptcy

Sears and Kmart merged to form Sears Holdings in 2005 when they had 3,500 United States stores between them.

Sears CEO Eddie Lampert is putting together a proposal to buy the company out of bankruptcy, but creditors appear skeptical and have been pressing for an outright liquidation, according to reports.

The company said it has arranged $300 million in debtor-in-possession financing, which will allow it to continue operating the business and paying employees while it tries to restructure around a smaller group of stores.

Business Insider/Hayley PetersonSears has been losing money and closing stores for years.

Sears Holdings, the parent company of Sears and Kmart, faces an October 15 deadline to pay $134 million on its debt.

Lampert has been willing to pour additional cash into the company in return for debt backed by real estate or other hard assets.

Lampert will also stepdown as CEO, but remain Chairman.

Sears has hired M-III Partners, a boutique advisory firm specializing in seeing companies through bankruptcies and restructuring, according to the Wall Street Journal. Reports circulated that the company is talking to advisers and banks in preparation for a bankruptcy filing.

The largest USA toy retailer, Toys "R" Us, tried to emerge from its 2017 bankruptcy filing but was forced to liquidate six months later after creditors lost confidence in its turnaround plan.

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Sears has been closing stores and selling properties as it grapples with a debt load of more than $5bn.

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.

Sears and Kmart stores and their online and mobile platforms will remain open for business, according to a company statement.

At the start of August, there were 866 Sears and Kmart stores.

The retailer employed about 89,000 workers in the United States as of February, compared with 246,000 people five years ago.

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 U.S. department store operator was close to securing on Sunday (Oct 14) to fund operations during bankruptcy proceedings, people familiar with the matter said.

Lampert is now Sears' largest shareholder, with about half the company's shares. He told the New York Times, "there is something really wrong with this picture" in relation to the arrangement between Sears and Seritage.

Chicago's Sears Tower was the world's tallest building when it was completed in 1973, but in the following decades consumers increasingly turned to e-commerce and brick-and-mortar rivals such as Walmart Inc and Target Corp.

One of the major assets sales included Stanley Black & Decker's purchase of the Craftsman brand from Sears Holdings for $900 million.

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