Sears hires advisers to prep bankruptcy filing

Gladys Abbott
October 11, 2018

The filing could come this week in anticipation of the company's $134 million debt payment due Monday, the Wall Street Journal reported.

M-III Partners has been working the past couple of weeks at Sears Holdings' headquarters in Hoffman Estates, Ill., people familiar with the situation told the Journal. But if Sears is now in touch with banks to secure the financing needed for a bankruptcy filing, as CNBC reported Wednesday morning, that could send the surest signal yet that such a move may not be far off.

After years of store closures, Sears, once the world's largest retailer, could be just days away from facing bankruptcy.

Sears mentioned those constraints as part of a proposal it offered to sell real estate to help pay down borrowings, which would cut debt by almost 80 percent. But its declines goes back decades, well before the growth of online shopping that threatens traditional brick-and-mortar retailers. Lampert's hedge fund, ESL Investments, offered to buy Kenmore and certain other assets earlier this year. Sears' acting spokesman, Howard Riefs, said Brathwaite had informed the retailer of his exit last month.

Lampert himself has had a controversial tenure as chief executive. Shares of Sears Holdings Corp. plunged as much as 31 percent in pre-market trading.

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Lampert has invested and lent to Sears many times over the years, making him and his hedge fund the company's largest shareholders with a stake just shy of 50 percent, as well as its biggest creditor, with about $2.5 billion owed to him or funds he controls. That kind of liquidation would be especially hard for lower-tier malls and shopping centers hard-pressed to find tenants in low-demand areas.

J.C. Penney's former CEO Marvin Ellison in 2016 positioned the Plano-based retailer to win shoppers from Sears as it closed stores by adding kitchen and laundry appliances to stores.

The Wall Street Journal quoted sources saying Lampert wants to restructure and is anxious that a bankruptcy filing will lead to a liquidation, which has happened with so many retailers, the most recent being Toys R Us.

"This has been the slowest moving train wreck happening for literally years", Perkins said. But even as Sears appears to near its "inevitable conclusion", Perkins said its final demise will set a precedent for an iconic American brand that fell from the height of retail dominance. "That is a real risk that we saw happen with Toys "R" Us", said Sandy.

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