Sears, Once America’s Biggest Store, Collapses Into Bankruptcy

Sears, once the largest retailer in the world, is closing hundreds of stores and reportedly planning to file for bankruptcy. Here's how it got there.

"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". Lampert learned long ago that he could make money from from selling off some of the company's signature brands, like Craftsman tools and Lands End.

The company filed for Chapter 11 protection from creditors with the US Bankruptcy Court in White Plains, New York, listing more than US$10 billion in debts and more than US$1 billion in assets.

Companies that file for bankruptcy typically negotiate a special kind of loan to stay in business while they go through the bankruptcy process.

According to the release, the now-former CEO Edward Lampert will remain Chairman of the Board. Mohsin Meghji, a managing director of the M-III Partners corporate advisory firm, was appointed chief restructuring officer.

Sales at the company's established locations tumbled almost 4 per cent during its fiscal second quarter.

By the time Sears limped into bankruptcy on Monday, the once-great company was shriveled and sickly.

Sears said it will sell assets and begin closing 142 unprofitable stores by year-end with the aim of reorganizing around a smaller platform of around 700 of its best stores. Sears merged with Kmart in 2005.

The company says in its release that 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.

For years, Sears has contended with the threat that it would become the latest big-name retailer to fall to online competition and crushing debt.

A spokesman for Lampert declined to comment on details of the bankruptcy financing, while a Sears spokesman and spokespeople for the banks didn't immediately respond to requests for comment.

Sources told Reuters over the weekend that Lampert was expected to contribute towards a financing package of between $500 million and $600 million.

"As we look toward the holiday season, Sears and Kmart stores remain open for business and our dedicated associates look forward to serving our members and customers", Lampert said in a statement.

Previously, Sears has secured cash by selling stores to Seritage Growth Properties, a real estate investment trust which the retailer formed in 2015 to convert Sears and Kmart stores into different properties, such as offices, high-end retail and residential complexes. Lampert personally owns 31 per cent of the company's shares, while his hedge fund has an 18.5 per cent stake, according to FactSet. Back then, it operated 2,200 stores in total. Lampert personally owns 31 percent of the companys shares.

Those deals could be subjected to new scrutiny by Sears' creditors in bankruptcy court.

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