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Sears bankruptcy could come this weekend | CMO Strategy

10 October 2018

Sears Holdings Corp (SHLD.O) is preparing to file for Chapter 11 bankruptcy protection in the coming days following years of declining sales, sources said on Wednesday, casting doubt over the survival of what was once the world's largest retailer.

The committee has been resisting the plan amid concerns that creditors and shareholders would sue over it being too favorable for Lampert.

Shares of Sears tumbled 18 cents, or 31 percent, to 40 cents in trading before the market opened. But if Sears is now in touch with banks to secure the financing needed for a bankruptcy filing, as CNBC reported Wednesday morning, that could send the surest signal that such a move may not be so far off.

Spokesmen for Sears and ESL Investment Inc., Mr. Lampert's hedge fund, didn't immediately respond for a request for comment. The retail giant faces a $134 million debt payment on October 15th. Lampert is the company's biggest shareholder. While the SPDR S&P Retail ETF (XRT) is up 6.5% year to date, and fellow department stores like Macy's (M), Kohl's (KSS), and Nordstrom (JWN) have climbed more than 30% since the start of the year, Sears has lagged-and how.

Sears continues to discuss other options and could still avert an in-court restructuring, the people added. Sears' acting spokesman, Howard Riefs, said Brathwaite had informed the retailer of his exit last month.

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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, whose stock price topped out at more than $120 a share in 2007, has struggled under the leadership of Eddie Lampert, a Wall Street prodigy who took control of Sears more than a decade ago and became its CEO in 2013. The company is now $5.6 billion in debt.

The hedge-fund billionaire is looking to cut more than $1 billion from Sears' $5.5 billion debt, unload another $1.5 billion worth of real estate and sell $1.75 billion in assets, including the Kenmore appliance brand, according to the Journal report.

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.

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

Sears bankruptcy could come this weekend | CMO Strategy