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Sears files for bankruptcy, deserted by shoppers and mired in debt

15 October 2018

The closings are in addition to 46 locations the once-mighty retailer already planned to shutter, though it did not specify how numerous new closures would be Sears or Kmart stores, according to the Chicago Tribune. In its last fiscal year, it generated $16.7 billion in sales, down from more than $50 billion in 2008.

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. Negotiations over the fate of the fallen company have been continuing this week, as it faces a critical $134 million of debt that is maturing on October 15.

At its peak in the 1960s, Sears sold everything from toys to auto parts to mail-order homes, and was a key tenant in nearly every big mall across the United States.

Judge Robert Drain will oversee the bankruptcy, with Sears represented by the law firm Weil Gotshal & Manges, according to court documents.

There will be a lot of people who won't have jobs on the back end of this move, as necessary as it might be, and a lot more who have to look at management's track record and assume the rest might be gone in the near future, too.

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Over the summer, a special board committee Sears created was resisting a rescue offer from Lampert to acquire assets from it, including its Kenmore appliance name. Sears was widely considered to be an early innovator of the shopping landscape.

Edward S. Lampert, Chairman of Sears Holdings, said the insolvency filing would give the company the "flexibility to strengthen its balance sheet" and enable it to accelerate a strategic transformation.

In addition, ESL is also exploring a stalking-horse bid to buy "a large portion" of the company's stores in the bankruptcy process.

Lampert also became Land's End Inc's biggest shareholder when the clothing manufacturer was spun out of Sears in 2014.

Sears has been closing stores and selling properties as it grapples with a debt load of more than $5bn. But in recent years, she's been disappointed by the lack of customer service and outdated stores.

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But they will need to do better than a year ago.

"The problem in Sears' case is that it is a poor retailer", Saunders wrote in his analyst note.

In an earlier attempt to avoid bankruptcy, Sears a year ago sold its Craftsman tool brand to power tool maker Stanley Black & Decker for $900 million. Lampert bought Sears in 2004 and merged it with Kmart, in which he had a controlling stake, the next year.

However, with the rise of Amazon, the advent of discount shopping on the internet and competition from stores like Walmart, Sears' target audience has drifted elsewhere. At the time, they had 3,500 USA stores between them.

As of May, it had fewer than 900 stores, down from a 2012 peak of 4,000.

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Store shelves have been left bare as many vendors have demanded more stringent payment terms, says Mark Cohen, a professor of retailing at Columbia University and a former Sears executive.

Sears files for bankruptcy, deserted by shoppers and mired in debt