Sears files for bankruptcy News
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Sears files for bankruptcy

Sears Holdings Corporation (Holdings) filed for bankruptcy in the US Bankruptcy Court for the Southern District of New York on Monday, announcing that it intends to remain in business but will close at least 142 stores by the end of the year.

Holdings, the parent company of Sears and Kmart, filed a petition for debt relief under Chapter 11 of the bankruptcy code. If approved, Holdings will close about 20 percent of its remaining stores and sell its Kenmore and Home Services brands. In its filing, Holdings listed $11.3 billion in liabilities and $7 billion in assets.

Eddie Lambert, a hedge fund manager who served as the company’s CEO and chairman of the board of directors, as well as the company’s largest creditor, stepped down from his position as CEO but will retain his chairmanship. ESL, Lambert’s hedge fund, has guaranteed an additional $300 million in funding to keep the company running during the bankruptcy process, which is provided on top of the $2.5 billion he has already lent to the company.

In a press release issued by Holdings, the company summarized their plan moving forward:

Holdings intends to reorganize around a smaller store platform of [earnings]-positive stores. The Company believes that a successful reorganization will save the Company and the jobs of tens of thousands of store associates. Holdings is currently in discussions with ESL regarding a stalking- horse bid for the purchase of a large portion of the Company’s store base. There can be no assurance that any transaction will be consummated or on what terms any transaction may occur. Additionally, Holdings expects to market and sell certain of the Company’s assets over the coming months.

Holdings will also close 142 unprofitable stores near the end of the year. Liquidation sales at these stores are expected to begin shortly. This is in addition to the previously announced closure of 46 unprofitable stores that is expected to be completed by November 2018.

Once the largest retailer in the US, Sears has years of shrinking revenue in light of online retailers like Amazon.

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