Business: Sears preparing for bankruptcy by this weekend.
The long goodbye for America’s most iconic retailer inches closer to an ending.
Sears Holdings, the struggling U.S. chain owned by hedge fund manager Eddie Lampert, is preparing for a bankruptcy filing as soon as Sunday, according to a person familiar with the plan. The company faces a critical debt maturity next week.
The plan to file for Chapter 11 protection is a rebuff to Lampert, whose fund, ESL Investments, is the retailer’s biggest equity holder and a major debt holder. For weeks, ESL had been pushing a debt restructuring proposal that would avoid a bankruptcy filing. The company is now focused on securing financing that would fund operations through bankruptcy, said the person, who asked not to be identified because the discussions are private.
A filing would be the culmination of years of decline as Sears has struggled to adapt to a changing retail environment. It would also mark
a stunning downfall for a company that for much of the last century epitomized America. Its wide-ranging popularity enabled it to dominate its industry as much or even more than Amazon.com does today.
35 cents
Representatives from Sears and ESL didn’t immediately return requests for comment. Sears shares traded for as low as 35 cents in New York, a 94 percent drop in the past year. The future of Sears’s 89,000 employees — down from 246,000 in 2013 — remains unclear.
“In the face of a very robust economy and a very dynamic retail environment, they just failed to reinvest in all the pillars that allow a retailer to succeed today,” said Steve Goldberg, president of the Grayson Co., a New York-based consultancy. “Infrastructure, real estate, digital presence — it’s hard to name a place where they really kept their profile in connecting with the customer.”
DIP financing
The company has taken a number of steps in recent days to prepare for a filing.
It hired boutique advisory firm M-III Partners LLC, the Wall Street Journal reported late yesterday, citing people familiar with the situation it didn’t identify.
The company separately said it named restructuring expert Alan Carr to its board of directors.
CNBC earlier reported that the company was arranging a bankruptcy loan, known as debtor-inpossession financing.
Sears faces $134 million of debt maturing on Monday. ESL said in a filing last month that the borrowings coming due were among those creating “significant near-term liquidity constraints” for the company.
ESL proposed last month for Sears to refinance its debt and sell real estate to help pay down borrowings.