By Tracy Rucinski and Jessica DiNapoli
(Reuters) – An insolvency judge has approved a $ 300 million financing on Monday to keep department store chain Sears Holdings Corp. open during the Christmas shopping-malls a chance to stay in business ,
Sears filed for bankruptcy on Chapter 11 Monday in White Plains, New York, with the plan to close 142 of its 700 stores by the end of the year and sell its best stores at auction in January to a buyer who sold them keep it operational.
Sears, Roebuck and Co and Kmart Corp's Bankruptcy Proceeds After a Decade of Declines in Sales, Hundreds of Store Closures, and Years of Billionaire Business Eddie Lampert attempted to turn over the company he had acquired in 2005 for $ 11 billion ,
(Graphic: Fall of a Titan – https://tmsnrt.rs/2A3giRQ)
Lampert, who resigned as CEO of Sears on Monday but becomes re chairman, had promised to restore Sears to its glory days when it did owned the tallest building in the world and companies that included a radio station and Allstate insurance.
But the company, which has nearly 70,000 employees, has not turned a profit since 2011, and critics say Lampert worsened the business over the years, even as he bought the company's shares and lent him money made him his biggest shareholder and creditor.
"For someone of my generation, Sears Roebuck was a big deal … Sears has been dying for many years, it has apparently been inappropriate for many years, and it's a shame," US President Donald Trump told reporters on Monday , US Treasury Secretary Steven Mnuchin served on the board of Sears from 2005 to 2016.
(GRAPHIC: Mall REITs – https://tmsnrt.rs/2Op4Qcj)
Lampert and its hedge fund ESL Investments Inc. own just under 50 percent of Sears' stock and are its largest creditor, at around $ 2 , 5 billion owed to him and ESL. He has yet to disclose whether he has made a profit or loss since he invested in the company after years of complex financial engineering in Sears.
Beyond the $ 300 Million Bankruptcy Financing Package from its Existing Lenders Sears secured an additional $ 300 million in bankruptcy funding from Lampert's ESL on Monday.
Sears listed $ 6.9 billion in assets and $ 11.3 billion in liabilities filed in the US Bankruptcy Court in the southern district of New York. His debt to Pension Benefit Guaranty Corp, a government agency that oversees the retirement benefits of former Sears workers, was not disclosed in the bankruptcy petition.
As part of the bankruptcy plan Lampert's executive function is replaced by a three-person committee. Mohsin Meghji, Managing Director of corporate consulting firm M-III Partners, has been appointed Chief Restructuring Officer.
Sears had previously announced the separate closure of 46 unprofitable stores and said Monday that is expected to close next month. 19659016] Sears also weighs the sale of "a large part" of its business and said they could be bought by Lampert's hedge funds in a bankruptcy auction.
On Monday, bankruptcy court, Andy Diederich, a lawyer for Sears investor Bruce Berkowitz, former member of the retailer's board, expressed concern that Lampert would have too much control over the bankruptcy process.
"Most of the company is gone," said Diederich.
Shareholders generally lose all or most of their investment when a company goes bankrupt, and Sears' ability to escape liquidation will depend on the willingness of creditors and suppliers to keep the company afloat. Strong sales in the upcoming Christmas season will be decisive.
Toys & # 39; R & # 39; US, the largest US toy retailer, tried to wind up filing for bankruptcy in 2017, but had to liquidate six months later after creditors lost confidence
STORE CLOSURES, ASSET SALES
Major Sears suppliers, such as Whirlpool Corp and Electrolux AB, tried to dispel fears of their confrontation with the bankrupt trader. Whirlpool said Sears 'bankruptcy would have limited impact on the business, while Electrolux stated that it did not assess a need for one-time material costs as a direct result of Sears' debt restructuring.
Sears and Kmart shops are open for business. The company said it continues to pay its employees' wages and benefits and is working with the sellers to ensure its shelves remain filled.
"The company believes that a successful reorganization will save the company and jobs of tens of thousands of business partners," Sears said in a statement.
Shares in Illinois-based Sears closed at about 41 cents on Friday, down from over $ 100 over the years after Hedge Fund star Lampert, once praised as another Warren Buffett, put it together with discount Save Kmart in an 11- Billion deal in 2005.
Sears dates from the late 1880s. His mail order catalogs, ranging from toys, medicine and gramophones to cars, kits and gravestones, made him into the Amazon.com Inc. of his time.
The iconic retailer, however, was gradually losing its luster as consumers increasingly turned to e-commerce and tile rivals such as Walmart Inc and Target Corp.
"It's a sad thing they go bankrupt, but they did not let it go well, and that's the consequence of not doing something right," 61-year-old retiree Paul Thompson said. Customer in one of his shops in Bridgehampton, New York.
One of the issues that pays off for investors is the value of the assets owned by Sears among the prime real estate.
The company sold 235 of its best businesses for $ 2.7 billion to a Lampert-based company, Seritage Growth Properties. Lampert also became the largest shareholder of Land's End Inc. when the apparel manufacturer was spun off Sears in 2014.
These transactions could be reviewed by Sears's creditors before the Bankruptcy Court.
You live in a fish bowl and every transaction is considered and investigated, "said Corali Lopez-Castro, managing partner of the law firm Kozyak Tropin & Throckmorton.
In a previous attempt to avoid bankruptcy, Sears sold his company last year Tool brand Craftsman for machine tool maker Stanley Black & Decker for $ 900 million, and also signed a deal to sell Kenmore appliances on Amazon.com.
In the summer, a special board committee that created Sears resisted a rescue offer from Lampert to acquire assets from it, including his Kenmore appliance name Reporting by Tracy Rucinski in Chicago and Jessica DiNapoli in White Plains, New York; Additional coverage by Tom Hals of Wilmington, Delaware Melissa Fares of Bridgehampton, New York, and Rama Venkat in Bangalore, edited by Louise Heavens and Nick Zieminski)