Published: Thu, October 11, 2018
Money | By Ralph Mccoy

Retail Giant Sears On Brink Of Bankruptcy, Owes $5B To Creditors

Retail Giant Sears On Brink Of Bankruptcy, Owes $5B To Creditors

Sears Holdings shares lost almost a third of their value in early trading on Wednesday after a report said that the beleaguered retailer had hired advisers to prepare for a bankruptcy filing ahead of a debt payment deadline.

Sears Holdings Corp. has hired an advisory firm to work on a bankruptcy filing that could come as early as this week, The Wall Street Journal reported Tuesday night.

Sears faces US$134 million of debt maturing on October 15, and Lampert's ESL Investments said in a filing last month that the borrowings coming due were among those creating "significant near-term liquidity constraints" for the company. The company didn't immediately respond to a request for comment from Barron's. The Journal also reported the billionaire Lampert, who has rescued the company in the past, could make the payment to avert an in-court restructuring. The stock has lost about two-thirds of its already depressed value since Lampert announced the attempt to restructure the company's debt on September 24. Even after several rounds of store closures across the country in recent years, the holding company still operates around 500 Sears stores and 360 Kmart stores.

Shares of Sears (SHLD.O), an iconic American retail brand which traded above $100 a decade ago but have fallen to less than $1 in the past year, were down at 41 cents in trading before the bell.

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Separately, Sears added restructuring expert Alan Carr to its board of directors as the company faces critical debt repayments and looks to overhaul its borrowings, the company said earlier today. He also called on the company to sell off $3.25 billion in real estate and assets.

But the retail landscape is littered with out-of-business brands that tried to reorganize in the bankruptcy process and liquidated their businesses instead. Share prices of JCPenney, Kohl's and Bed Bath & Beyond were up as of midday Wednesday, which Kopsky said was an indication that the market believes Sears will file for bankruptcy and that those retailers will benefit in the near term. "Like many other brick and mortar retailers, Sears has encountered very substantial obstacles to profitability as a result of the enormous changes to the retail environment caused by the ever-increasing trend to online shopping".

In July, Sears closed its last store in Chicago, once its hometown. That's down from 317,000 United States employees in early 2006, soon after the merger.

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