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Sears Hires Advisers to Prepare Bankruptcy Filing

Sears Holdings

SHLD -5.99%

has hired M-III Partners LLC to prepare a bankruptcy filing that could come as soon as this week, according to people familiar with the situation, as the cash

Employees at M-III Partners, a boutique advisory firm, have spent the past few weeks working on the potential filing, the people said. In recent days, M-III staff have been at the retailer's headquarters at Hoffman Estates, Ill., One person said. Sears continues to discuss other options and could still retire on in-court restructuring.

Sears, which has been losing money for years, has $ 1

34 million in debt due on Monday. Edward Lampert, the hedge fund manager who is Sears's chairman, chief executive, largest shareholder and biggest creditor, could rescue the company.

But Mr. Lampert is pushing for more than $ 1 billion from Sears's $ 5.5 billion debt, selling another $ 1.5 billion of real estate and divesting $ 1.75 billion of assets, including the Kenmore appliance brand, which he has offered $ 400 million to buy himself.

The company's poor financial performance has made it difficult to get support from the lenders for the plan, one of the people said. Mr. Lampert hopes to shrink Sears back to profitability, this person said. The company has already closed hundreds of stores in recent years.

 Sears Hires Advises on Prepare Bankruptcy Filing

Sears has more than $ 11 billion in cumulative losses since 2011, and its annual sales have dropped nearly 60% in that period to $ 16.7 billion. Analysts say it needs to raise more than $ 1 billion a year to stay afloat.

Mr. Lampert also has advice from consulting firm AlixPartners; lawyers at Weil, Gotshal & Manges LLP;

On Tuesday, Sears added restructuring expert Alan Carr as a director, expanding the six-person board to seven and investment bank lazard ltd., as he said he was trying to keep the company afloat and restructure out of bankruptcy court , Mr Carr runs a restructuring advisory firm and worked as a restructuring lawyer at Skadden, Arps, Slate, Meagher & Flom LLP. Gibson Brands Inc.-have recently navigated the bankruptcy process.

Once hailed as a genius investor for smart bets he made on




      Mr. Lampert met his match at Sears, Roebuck & Co. The retailer was struggling with it. in 2005.

He moved quickly to cut expenses and close unprofitable stores. Walmart Inc. and Amazon.com Inc. grew stronger. But the business is coming out of the recession. The company was not helped by Mr. Lampert's unconventional approach to retailing. He resisted investing in store upgraded and, after becoming CEO in 2013, managed the company from Florida.

Mr. Lampert wants to restructure Sears's debt without filing for bankruptcy protection, because he views bankruptcy as risky for retailers, according to a person familiar with his thinking. Retailers often enter into bankruptcy with the liquidation of wind, rather than liquid, as a matter of fact with R "Us Inc., this person said.

Mr. Lampert, whose hedge fund ESL Investments Inc. owns a majority of shares of Sears shares.

Critics have accused Mr. Lampert of stripping assets from the beleaguered company.

While M-III's partners are themselves new to the restructuring industry, its founder, Mohsin Meghji, is considered a turnaround expert. The former Arthur Andersen consultant and co-founder of another boutique advisory firm has been working on restructurings for nearly 30 years.

Sears, which still has nearly 900 stores, would be M-III's biggest assignment. Bankruptcy protection in 2017.

Shares of Sears, which was traded as high as $ 144 a day ago, closed Tuesday at 59 cents, a sign that investors are bracing for a potential bankruptcy filing or restructuring.

Write to Suzanne Kapner at [email protected], Lillian Rizzo at [email protected] and Soma Biswas at [email protected]

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