UPDATE: Sears Is Bankrupt

UPDATE: Sears Files Chapter 11

Sears Holdings Corp. today filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York.

The company — parent of Sears and Kmart department stores — listed the value of estimated assets at between $6.9 billion — dwarfed by liabilities of $11.3 billion.

Sears said it has secured $1.875 billion in debtor-in-possession financing — or $300 million more than it previously had — to fund stores and pay off existing loans pending the bankruptcy case.

What We Reported on Friday, Oct. 12

Shares for Sears Holdings Corp. are tumbling after reports surfaced that the company is arranging to file for bankruptcy protection as early as this week.

The news, first reported in The Wall Street Journal yesterday, comes as the embattled retailer — parent company to Sears and Kmart — faces a $134 million debt payment due on Oct. 15. A Chapter 11 filing would help the company to cut debt and close unprofitable stores in order to stay afloat as a smaller retail enterprise.

The WSJ report added that Sears had tasked boutique advisory firm M-III Partners LLC to assist in bankruptcy proceedings ahead of the looming deadline. The publication also reported that Sears had hired restructuring expert Alan Carr to its board.

In a last-ditch effort to prevent bankruptcy, CEO and major shareholder Eddie Lampert’s hedge fund, ESL Investments Inc., urged Sears in a proposal disclosed in late September to restructure its liabilities as well as sell about $1.5 billion in real estate and $1.75 billion in other assets. The move would reduce the department store chain’s debt by nearly 80 percent to approximately $1.2 billion. (Lampert first offered to purchase the company’s real estate through his hedge fund in April.)

“Sears must act immediately to have sufficient runway to continue its transformation,” read the filing. “Given the current situation, we believe that substantial progress must be made … without delay. We are ready and willing to move as quickly as possible to help the company transform into a business that is better positioned to thrive in the 21st century.”

Despite major staff reductions and selling of properties, the 125-year-old company has struggled to turn around its business in recent years amid growing online competition and a decline in brick-and-mortar traffic. Sears did not immediately respond to requests for comment.

Want more?

Sears Lays Off Another 200 Employees in Hopes of Becoming Profitable Again

Sears Is the Latest Retailer to Be Hit by a Major Data Breach

More From Our Brands

Access exclusive content