Sears Holdings Corporation has filed for bankruptcy protection. The Illinois-based retail giant and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the US Bankruptcy Court for the Southern district of New York. According to the company, the filing will allow it to establish a sustainable capital structure, streamline its operating model and invest in long-term growth.
Sears has received commitments for US$300 million in senior priming debtor-in-possession (DIP) financing from a number of lenders and is negotiating US$300 million in subordinated DIP financing with ESL Investments. ESL is the company’s largest stockholder and creditor, and Sears is currently in discussions with ESL regarding a stalking-horse big for the purchase of a large portion of its store base.
The company’s Sears and Kmart stores, as well as its online and mobile platforms, are open and will continue to offer a full range of products and services. However, the company plans to close 142 unprofitable stores later this year, in addition to the previously announced closure of 46 stores (to be completed by November).
Sears also announced that it intends to continue payment of employee wages and benefits, honor member programs and pay vendors and suppliers for all goods and services provided on or after the filing date.
Edward Lampert has stepped down from his role as CEO of the company, effective immediately, though he will remain chairman of the board. The board has created an Office of the CEO, which will be responsible for managing day-to-day operations during the filing process. The Office of the CEO will be composed of CFO Robert Riecker; CDO, customer experience and integrated retail Leena Munjal; and president of apparel and footwear Gregory Ladley. Mohsin Meghji, managing partner of M-III Partners, has been tapped as chief restructuring officer.
Just last year, Toys “R” Us filed for bankruptcy protection. The retailer, along with certain of its US and Canadian subsidiaries, voluntarily filed for relief under Chapter 11 of the Bankruptcy Code in the US Bankruptcy Court for the Eastern District of Virginia in September 2017. At the time, TRU said it would use the court-supervised proceedings to restructure outstanding debt and establish a sustainable capital structure in order to invest in long-term growth. Then, in March, the New Jersey-based retail giant began the process of shuttering its US operations (resulting in the closure of more than 700 remaining stores and leading to an estimated 300,000 job losses).