Thursday, 18 October, 2018

Sears shares plunge as report says retailer could file for bankruptcy soon

Report Sears could file for bankruptcy as soon as this week Sears appears to be preparing for a long expected bankruptcy filing
Nellie Chapman | 11 October, 2018, 06:47

Sears has hired M-III Partners, a boutique advisory firm specializing in seeing companies through bankruptcies and restructuring, according to the Wall Street Journal.

A Sears special committee is weighing a prior offer from Lampert to acquire the retailer's Kenmore appliances brand and its home services business for as much as $480 million.

Sears Holdings is getting things in order for a bankruptcy filing that could come sometime this week. Lampert and ESL are the company's two largest shareholders. Sears wants to reduce its debt load by 80%, hoping creditors will bite at the chance to make a deal while the company is still a going concern.

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. 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 yet that such a move may not be far off. Sears' acting spokesman, Howard Riefs, said Brathwaite had informed the retailer of his exit last month.

Sears stock, which once traded at more than $100 a share, is down to 40 cents a share.

But the retail landscape is littered with out-of-business brands that tried to reorganize in the bankruptcy process and liquidated their businesses instead.

Sears, which was the world's largest retailer in the 1960s, has been struggling in recent decades, in the face of declining foot traffic as brick-and-mortar stores struggle to compete with online stores led by Amazon.com. 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. But even as Sears appears to near its "inevitable conclusion", Perkins said its final demise will set a precedent for an iconic American brand that fell from the height of retail dominance.

Sears and Kmart merged to form Sears Holdings in 2005 when they had 3,500 United States stores between them. The retailer closed its last Sears store in Chicago in July and has announced plans to close another 46 stores by November, including a Kmart in Steger and a Sears in Bloomington. That's down from 317,000 U.S. employees in early 2006, soon after the merger.