Retail Icon Sears Hires Adviser for Bankruptcy Filing

Lloyd Doyle
October 10, 2018

Sears Holdings Corp.is adding a restructuring expert to its board, suggesting the ailing retailer may be preparing to take significant actions to survive or to protect its remaining assets. The committee is concerned it will be opening the company up to litigation, one source said.

Shares of Sears tumbled 18 cents, or 31 percent, to 40 cents in trading before the market opened. Talks are under way to arrange debtor-in-possession financing for a bankruptcy filing that could come in the next few days, the source added. The company faces a $134 million debt payment on Monday.

Sears' and Kmart's chairman, chief executive, largest shareholder and biggest creditor - reportedly is looking for a larger restructuring than just anteing up more cash to bail out the cash-strapped retailers. Those include Sears Home Services and the company's flagship Kenmore brand, which Lampert offered to purchase in August for $400 million. Lampert is the company's biggest shareholder. Sears's poor performance has always been an issue for owners, but landlords are split between those that are likely cheering the possibility of reclaiming its locations for more profitable tenants and those that see its potential bankruptcy as a negative tipping point.

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. Sears is also considering other options and could choose not to file for bankruptcy, the people said. The stock, which traded above $100 a decade ago, has fallen to less than $1 in the past year.


The Hoffman Estates, Illinois-based retailer has posted seven straight years of losses and its sales have not grown since the 2008 financial crisis. The retailer warned last month it may go out of business if the deals proposed by Lampert were not approved.

Since rescuing Kmart from bankruptcy and combining it with Sears in 2005, Mr. Lampert has closed hundreds of stores and sold off divisions as the business faltered.

Lampert - Sears's largest shareholder and creditor and the owner of the hedge-fund ESL Investments - asked creditors last month to refinance $1.1 billion in debt before the October 15 payment, according to a filing with the U.S. Securities and Exchange Commission.

The Sears notes coming due on October 15 traded Tuesday morning at 87 cents on the dollar, according to MarketAxess.

Other reports by Iphone Fresh

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