As tipped by ChannelNews Sears US retailer Sears who have been under siege from Amazon, have commenced bankruptcy proceedings as it still shops around for a lifeline.
Sears has some financing already in hand, but at this stage is moving to close several stores.
The company said it will try to reorganize around a smaller number of more profitable outlets, but also acknowledged it’s at risk of liquidating.
“Will Sears be relegated to the dustbin of history, and will 68,000 Americans lose their jobs, or will Sears enter the next chapter of its life as an iconic American company, enduring yet another shift in the retail landscape?” Chief Financial Officer Robert Riecker said in a court affidavit.
The answer, he added, would be up to creditors and business partners, whose support is needed during the bankruptcy. Court papers filed early Monday estimates liabilities of US$11.3 billion and assets of just $6.94 billion.
Sears said it’s still discussing $300 million in financing with outside investors.
The bankruptcy looks like the company is taking a “wait and see through the holiday season” approach, said Bill Norton, a partner in the Nashville office of Bradley who specializes in bankruptcy law.
“We’re Open to Serve You,” reads a banner on Sears and Kmart websites, which seek to reassure shoppers who could be scared off by the idea of bankruptcy. Fellow retailer Toys “R” Us Inc. recently tried to reorganize in bankruptcy but failed, and one criticism was that it did little media or advertising to convince shoppers it would live on.
Beyond the immediate store closings, Sears said it will choose additional stores to close after a more detailed analysis of profitability, their ability to be sold, and their lease agreements. The closures mark an attempt to find the right size for a company that has already liquidated more than 800 stores over 16 years.
Judge Robert Drain will oversee the bankruptcy, with Sears represented by the law firm Weil Gotshal & Manges LLP, according to court documents. A hearing is scheduled for Monday at 2 p.m. New York time in which Drain will be asked to approve a number of matters. The request for Lampert’s junior financing, however, is scheduled for a later time, while the company tests the market for others who may be able to give the financing on better terms, according to court papers.
The case is, Sears Roebuck and Co., 18-23537, U.S. Bankruptcy Court, Southern District of New York (White Plains)
