Sears struggling to keep suppliers

NEW YORK — Since filing for Chapter 11 bankruptcy, Sears Holdings Corp. has been trying to persuade suppliers to keep shipping it merchandise by touting the $ 300 million in financing it has secured so that its business can continue operating through the holidays.

But a growing number of manufacturers who themselves got hurt or watched others get burned by the quick demise of Toys R Us don’t want to take a chance.

Many manufacturers have already been keeping Hoffman Estates, Illinois- based Sears on a tight leash over the past few years as they watched its fortunes spiral downward.

But their reluctance to work with the retailer heading into the holiday shopping season is a major blow to its survival.

The fate of Sears, which also operates Kmart, depends on a critical flow of goods to its stores. Without a generous supply of merchandise, even the company’s dwindling base of customers may not shop there, hurting sales even more.

Suppliers are still gunshy after their experience with Toys R Us, which went out of business months after filing for Chapter 11 reorganization in the fall of 2017, leaving them with millions of dollars in unpaid bills. Vendors recovered only about 20 cents on the dollar.

As with Sears now, many suppliers were encouraged to continue stocking Toys R Us’ shelves through the holidays, industry experts said.

But Toys R Us announced it would liquidate its business in March after suffering a disastrous holiday season.

“Toys R Us was a game changer,” said Kenneth Rosen, a partner at Lowenstein Sandler, which represents several Sears vendors.

“My clients want to work with Sears. They very much want to see Sears survive. At the same time, they don’t want to get burned twice.” He declined to name the suppliers, but he says he’s advising them to give Sears credit “a week at a time.”

The big worry is that after Christmas, Sears will either be a full liquidation, or that Eddie Lampert, the company chairman and the largest shareholder, will buy back a group of stores and the balance will be shuttered.

As part of its bankruptcy restructuring, Sears plans to close 142 stores, leaving the company with roughly 500 by year- end.