Published: Mon, October 15, 2018
Finance | By Loren Pratt

Sears files for bankruptcy

Sears files for bankruptcy

Such financial woes contrast with the promise that Lampert made when he combined Sears and Kmart in 2005, two years after he helped bring Kmart out of bankruptcy.

Sears has filed for Chapter 11 bankruptcy protection, buckling under its massive debt load and staggering losses.

The last man standing while storied Chicago competitors like Wieboldt's, Montgomery Ward and Carson Pirie Scott fell by the wayside, Sears survived the Great Depression, adapted as its shoppers traded catalogs for downtown department stores, and followed customers to suburban shopping malls.

But while the retailers typically file for bankruptcy with the intention of staying in business, numerous retailers end up going out of business after filing.

At its peak, Sears sold everything from toys to auto parts to mail-order homes, and was a key tenant in nearly every big mall across the United States.

The company already has commitments for US$300 million of debtor-in-possession financing from its senior secured asset-based revolving lenders, according to the statement, and it's negotiating a US$300 million subordinated DIP financing with Lampert's hedge fund, ESL Investments Inc. Lampert partially spun off the company from its parent in 2012 and was Sears Canada's biggest shareholder.

Edward S. Lampert, Chairman of Sears Holdings, said the insolvency filing would give the company the "flexibility to strengthen its balance sheet" and enable it to accelerate a strategic transformation. Founded in 1892, it was a United States retail juggernaut until the 1990s, when it started facing stiff competition from Walmart, Target and other more agile competitors.

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.

The company's lenders are encouraging Sears to shut down and liquidate, the Wall Street Journal reported Thursday.


At various times, Sears brands have included Allstate Insurance, Coldwell Banker real estate and Discover Card. It has lost $11.7 billion since 2010, its last profitable year. The company shuttered more than 2,600 stores over the past 13 years.

In September, Lampert proposed that Sears restructure its finances without filing bankruptcy.

If Sears does file for bankruptcy, it could try to stay in business, using the court process to shed debt and unaffordable leases.

Sears was once the nation's largest retailer and its largest employer.

The company was started by Richard Sears, a train station agent in Minnesota who began selling watches by mail in 1886, according to the company's website. Sears moved to Chicago in 1887, and he hired watchmaker Alvah Roebuck as his partner.

The Sears catalogUE eventually sold products ranging from hardware and automobiles to kits for building an entire house.

In an earlier attempt to avoid bankruptcy, Sears past year sold its Craftsman tool brand to power tool maker Stanley Black & Decker for $900 million.

Lampert pledged to return Sears to greatness by leveraging its best-known brands and its vast holdings of land, and more recently planned to entice customers with a loyalty program.

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