Sears files for bankruptcy; Coronado store will close
- Author: Zachary Reyes Oct 16, 2018,
Oct 16, 2018, 0:31
Simon Property Group, the largest USA mall operator, has 59 Sears Holdings stores in its malls, the most of any REIT, but its exposure to the bankruptcy is "de minimis", he said.
Sears Chief Executive Eddie Lampert, also the company's largest shareholder and creditor, is exploring bidding on the assets as a so-called stalking horse, setting a floor with offers that other possible buyers could then attempt to top, the sources said.
The chapter 11 bankruptcy filing comes 131 years after Richard Sears moved his business to Chicago, where the watch company would grow to become a retail empire that gave the city its tallest building, employed hundreds of thousands of people and mesmerized children everywhere with its annual Christmas Wish Book catalog.
The company made a filing under the Chapter 11 of the United States Bankruptcy Code on Monday. More than 100,000 retired Sears employees are believed to hold pensions, which bankruptcy should protect.
A reorganization will keep rental income flowing but some locations are so valuable that outside investors could gain control of a site in an auction and not the REITs who are now Sears' landlords, Rothman said.
The bankruptcy filing was sparked by a standoff between Lampert, the company's biggest shareholder and lender, and a special board committee, over a rescue plan proposed by Lampert. Its holding company filed for bankruptcy today just as a massive payment on its debt was due.
The critical holiday season will be a particular challenge for Sears.
Vendors are considered unsecured creditors in the case of a bankruptcy and would only get pennies back on the dollar in bankruptcy court. It plans to begin liquidation sales at each of the 142 stores shortly.
A Sears store in Wilmington, Del.
But eventually, retail changed two more times, and Sears failed to be the company that saw either trend first. The struggling retailer has 687 Sears and Kmart stores, one-third the number it ran five years ago.
Sears said 142 stores would close in the next three months. In its last fiscal year, it generated $16.7 billion in sales, down from more than $50 billion in 2008.
Some retailers beat Sears on price, Walmart in particular, while others beat Sears on quality.
1893 - The company becomes Sears, Roebuck and Co.
"What Sears did was make big-city merchandise available to people in small towns".
"When you go into a bankruptcy, you're living in a fish bowl and every transaction will be looked at and examined", said Corali Lopez-Castro, Managing Partner at law firm Kozyak Tropin & Throckmorton. Like many Kmarts, the local store now carries a line of home appliances and bedding that traditionally was sold in Sears locations. Lampert, once hailed as the next Warren Buffett but increasingly described as a financial pirate, was accused of stripping Sears of its assets.