Stanley Black & Decker among largest creditors in Sears bankruptcy

Fredrick Soto
October 15, 2018

The company listed $6.9 billion in assets and $11.3 billion in liabilities in documents filed in the US Bankruptcy Court in the Southern District of NY.

USA retailer Sears, a brand that once dominated shopping malls in the country, has filed for bankruptcy. The company has said it's the nation's largest provider of home services, with more than 11 million service calls a year.

Eddie Lampert, the company's chair and largest shareholder who engineered the merger of Sears and Kmart in 2005, will give up his title of CEO as part of the bankruptcy filing. However, the company now has too much debt and not enough shoppers.

Sears said in a statement: "The company expects to move through the restructuring process as expeditiously as possible and is committed to pursuing a plan of reorganisation in the very near term as it continues negotiations with major stakeholders".

There are just four Sears open in metro Detroit: in Livonia, Lincoln Park, Novi and Westland.

American shopping malls in turn have pivoted toward a new generation of stores, food and entertainment, including players that began online before graduating to bricks and mortar.

Some retailers beat Sears on price, Walmart in particular, while others beat Sears on quality.

But it said that it's looking for a buyer for a large number of its remaining stores and that it will close at least 142 stores near the end of this year.

Lampert and his hedge fund ESL Investments Inc own just shy of 50% of Sears' shares and are its biggest creditor, with about $2.5 billion owed to the executive and funds he controls.

It's still unclear whether Lampert, who became chairman and CEO in 2013, will use his own money to keep Sears afloat, something he has been doing for years to offset losses. But plenty of others like Toys R Us and Bon-Ton Stores Inc., haven't.

Sears said its cash crunch had accelerated because concerned vendors required payment sooner.

Lampert pledged to return Sears to greatness by leveraging its best-known brands and its vast holdings of land, and more recently planned to entice customers with a loyalty program. The holding company has closed almost 3,000 Sears and K-Mart locations over the past decade and are now down to fewer than 1,000 retail locations.

Sears' stock has fallen from about $6 over the past year to below the minimum $1 level that Nasdaq stocks are required to trade in order to remain on the stock index.

"ESL believes that supervision by a judge will enable creditors to address any issue among them according to a clear set of rules and permit the sale of certain assets through a court-approved auction process to maximize value", the fund said in a statement.

Reuters noted that the company had 70,000 employees at one point, but has not turned a profit since 2011.

In the 1980s, Sears decided it should become a financial services company, adding Dean Witter and Coldwell Banker to its portfolio alongside Allstate, and launching the Discover credit card. A long series of store closings has left it with under 900 today.

"We're doing the job of two to three people".

The struggling retailer has been losing market share for years, but its Kmart and Sears chains still generate about $14 billion in annual sales.

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