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Sears, once a retail titan, files for Chapter 11 bankruptcy

Discussion in 'The NF Café' started by mr_shadow, Oct 12, 2018.

  1. mr_shadow Minister of State Security Moderator

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    Sears Holdings Corp is planning to close up to 150 of its department and discount stores and keep at least another 300 open as part of a plan to restructure under U.S. bankruptcy protection, people familiar with the matter said Friday.

    The plans, which remained in flux on Friday afternoon, would leave the fate of Sears’ remaining roughly 250 stores uncertain, the sources said. The future of the stores could hinge on Sears’ negotiations with landlords over their leases.

    In total, Sears has about 700 stores and roughly 90,000 employees.

    The beleaguered 125-year-old retailer, once the largest in the United States, hopes to sell stores and other assets, including its Kenmore appliances brand and home services business, in court-supervised auctions while under bankruptcy protection, the sources said.

    Sears Chief Executive Eddie Lampert, also the company’s largest shareholder and creditor, is exploring bidding on the assets as a so-called stalking horse, setting a floor with offers that other possible buyers could then attempt to top, the sources said.

    Reuters first reported on Thursday that Lampert was exploring bidding for some Sears assets. Such a plan could potentially keep a slimmer Sears alive as a going concern, the sources said.

    Sears was making progress in its negotiations with banks on Friday for financing to keep it afloat through the holiday season while in bankruptcy court, with lenders expected to provide several hundred million dollars, the sources said. The bankruptcy loan amount is unlikely to significantly exceed $400 million, though it could end up being less, the sources said.

    A key unresolved aspect of Sears’ negotiations with lenders involves setting deadlines for Sears to achieve specific business goals while under bankruptcy protections, the sources said.

    Sears is planning to seek bankruptcy protection in New York as soon as Sunday night, though a court filing could slip into Monday, the sources added, asking not to be identified because the negotiations are confidential.

    Sears did not immediately respond to a request for comment.

    Sears shares were trading up 20 percent at 41 cents on Friday, giving the company a market capitalization of $40 million.

    Lampert could help finance his bids for the assets by forgiving some of the money Sears owes him, as opposed to putting in more cash, Reuters reported on Thursday.

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

    But it has struggled to reinvent itself in the face of competition from companies such as Amazon.com Inc, as well as other brick-and-mortar retailers, including Walmart Inc.

     
    Last edited: Oct 12, 2018
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  2. mr_shadow Minister of State Security Moderator

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    I don't have direct experience with Sears since they only operate(d) in North America, but its worrisome that another big retailer looks to be biting the dust.

    I think a gradual decline in physical stores will make cities more boring.

    I'm not a luddite or anything, so I obviously appreciate the convenience of Amazon and Taobao. But I'm worried about the future of city centers. If there are no stores there because everything has moved online, then what incentive is there to ever go out of my house and see other people in real life?
     
  3. Mider T Busting in and out of guts

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    I feel like I read this headline every quarter.
     
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  4. Cardboard Tube Knight Chika is god now.

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    Ugh. Just die already.
     
  5. Skaddix Well-Known Member

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    Sears is still alive? Has to be some sort of Undead and Unholy Magic...
     
  6. mr_shadow Minister of State Security Moderator

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    I only know them for Sears Tower, which was the tallest building in the world 1973-1998.
     
  7. Mider T Busting in and out of guts

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    Sears used to mail out parts for entire houses which could be assembled by customers. They were pioneers in the mail-order catalog game.
     
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  8. Kitsune

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    I’m surprised it lasted this long. I remember seeing empty Sears stores since the early 90s.
     
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  9. Mider T Busting in and out of guts

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    Remember this commercial?

    Always made laugh:rotfl
     
  10. wibisana still newbie

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    Nah
    Lord Trump the saviour will save it
     
  11. zeroantizero Well-Known Member

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    Lampert seems really invested in Sears existence to potentially forgive loans to keep it going. Usually private equity and bondholders can't wait to pick alart the carcass. If only more if them were like him.

    Imo, part of Sears' problem is it's jack of all trades (and master of none). Aside from the big box (Target and Walmart) and grocery stores, surviving major retailers have reinvented themselves as bespoke service providers in narrow areas. To survive, it needs to find a place where it can be seen as the place to go. The thing is, for Sears, I don't know what that would be.

    I'm not sure how it works elsewhere, but most city centers in America are simply centralized business districts that turn into The Omega Man after 6:00pm. There might be a few thousand people left, but I never see them on the streets.

    Not like I've ever met someone I wanted to get closer to while out on my daily routine...
     
  12. mr_shadow Minister of State Security Moderator

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    Depressing thing I learned from Wikipedia is that Sears is no longer headquartered in the Sears Tower, which is also actually no longer called the "Sears Tower" (now "Willis Tower").

    The humiliation.

    It's like when the McDonald Brothers got fired from McDonald's.
     
  13. reiatsuflow Well-Known Member

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    Dicks sporting goods is an interesting one to watch because it's not some favored regional retailer like scheels and it can't compete with REI nationally, but it's doing its best to die as slowly as humanly possible. It's becoming the 'engagement' retailer involved in local school sporting events, and community stuff and such. They're doing a really good job of trying to roll with all these punches. They're still dying and they're not a great store, but they're got a real can-do attitude.
     
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  14. mr_shadow Minister of State Security Moderator

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    Sears Holdings Corp filed for Chapter 11 bankruptcy on Monday with a plan to close 142 more stores, throwing into doubt the future of the century-old retailer that once dominated U.S. malls but has withered in the age of internet shopping.

    The Chapter 11 filing to reorganize debts of the parent of Sears, Roebuck and Co and Kmart Corp follows a decade of revenue declines, hundreds of store closures, and years of deals by billionaire Chief Executive Officer Eddie Lampert in an attempt to turn around the company he bought in 2004.

    Lampert had pledged to restore Sears to its glory days, when it owned the tallest building in the world and companies that included a radio station and Allstate insurance.

    But the company has not turned a profit since 2011, and critics say Lampert let the stores deteriorate over the years, even as he bought the company's stock and lent it money. It has sold off the legendary Craftsman brand and is considering an offer from Lampert for the Kenmore appliance name.

    The company listed $6.9 billion in assets and $11.3 billion in liabilities in documents filed in the U.S. Bankruptcy Court in the Southern District of New York.

    The bankruptcy filing was sparked by a standoff between Lampert, the company's biggest shareholder and lender, and a special board committee, over a rescue plan proposed by Lampert.

    Under the bankruptcy plan, Lampert's executive role will be replaced by a three-person committee, though he will remain as chairman of the board. Mohsin Meghji, a managing director of the M-III Partners corporate advisory firm, was appointed chief restructuring officer.

    Shareholders generally lose their investment when a company files for bankruptcy, and the fate of Sears itself will depend on the willingness of creditors and suppliers to keep the company afloat.

    The largest U.S. toy retailer, Toys 'R' Us, tried to emerge from its 2017 bankruptcy filing but was forced to liquidate six months later after creditors lost confidence in its turnaround plan.

    STORE CLOSURES, ASSET SALES

    Sears said it will sell assets and begin closing 142 unprofitable stores by year-end with the aim of reorganizing around a smaller platform of around 700 of its best stores.

    It is also weighing the sale of "a large portion" of its stores and said they could be bought by Lampert's hedge fund in a bankruptcy auction.

    Meanwhile, Sears and Kmart stores are open for business. The company said it is continuing to pay employees' wages and benefits and is working with its vendors to ensure its shelves remain stocked.

    "The company believes that a successful reorganization will save the company and the jobs of tens of thousands of store associates," Sears said in a statement.

    The retailer employed about 89,000 workers in the United States as of February, compared with 246,000 people five years ago.

    Sears said it has received a $300 million financing package to fund its operations during the bankruptcy proceedings and was negotiating an additional $300 million.

    Sources told Reuters over the weekend that Lampert was expected to contribute towards a financing package of between $500 million and $600 million.

    Shares in Illinois-based Sears closed at about 41 cents on Friday, down from over $100 in the years after hedge-fund star Lampert, once hailed as another Warren Buffett, merged it with discount store Kmart in a $11 billion deal in 2005.

    Sears dates back to the late 1880s and its mail-order catalogues with merchandise from toys, medicine and gramophones to automobiles, kit houses and tombstones made it the Amazon.com Inc of its time.

    Chicago's Sears Tower was the world's tallest building when it was completed in 1973, but in the following decades consumers increasingly turned to e-commerce and brick-and-mortar rivals such as Walmart Inc and Target Corp.

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

    LAMPERT'S INVESTMENTS

    One of the lingering questions for investors has revolved around the value of Sears' assets, which include prime real estate.

    The company sold 235 of its best stores for $2.7 billion to a Lampert-created company, Seritage Growth Properties. Lampert also became Land's End Inc's biggest shareholder when the clothing manufacturer was spun out of Sears in 2014.

    Those deals could be subjected to new scrutiny by Sears' creditors in bankruptcy court.

    "When you go into a bankruptcy, you're living in a fish bowl and every transaction will be looked at and examined," said Corali Lopez-Castro, Managing Partner at law firm Kozyak Tropin & Throckmorton.

    In an earlier attempt to avoid bankruptcy, Sears last year sold its Craftsman tool brand to power tool maker Stanley Black & Decker for $900 million. It also signed a deal to sell Kenmore appliances on Amazon.com.

     
  15. Drake WORK MAKES YOU FREE

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    Sears was on track to become what Amazon is today, but I guess they didn't take it far enough. Now they have nothing worth offering, really.

    I used to hang out at my local mall's Sears all the time when I was a kid, but that particular store is probably going to be one of the stores that closes. The parking lot is completely empty now, but I remember how packed it used to be not too long ago...
     
  16. Nataly

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    With the popularity and convenience of online shopping and free delivery services, department stores like Sears have been on the decline for quite some time now. It is sad to see stores closing, but it is expected with such a difficult competition to beat
     
  17. Lord Valgaav Hero boy

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    Oh no! Now where will we get our tires?! :catshivers
     
  18. hadou bad motherfucker

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    When I came to the US, Sears was pretty strong. Over time, its struggles became known with the changing market. The proverbial writing on the wall...
     
    Last edited: Oct 15, 2018
  19. Takano-san Doroshī no yūjin

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    Sears could have blossomed in the internet age, but it floundered instead. Tragic.
     
  20. Hozukimaru &#32

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    It's very interesting but there is still some practicality in physical stores.

    I was reading an Economist article some months ago that explained that physical retail isn't actually dying despite the rise of online stores.

    My experience is that some low-price items may not excuse the delivery costs or maybe there is an immediate product need that has to be satisfied within the day.

    Also shopping in physical stores with friends, family or significant others can be an enjoyable activity.

    Not to mention that some product categories such as clothes frequently require testing. Of course online reviews also largely satisfy that need, in the case of electronics for example.
     
  21. Overwatch [Yogurt intensifies]

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  22. makeoutparadise I will have my revenge

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    Sears used to be the amazon of the world they used the same buisness model everything by mail
    Let's see if Amazon will be around in 100 years
     
  23. mr_shadow Minister of State Security Moderator

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    When I was in London I completely by accident ended up on Paternoster Row, which I recalled was listed in James Legge's Chinese Classics (1861-1872) as the place of business of his publisher Trübner &co. So I googled to see if they were still there somewhere.

    Turns out the company was acquired by Routeledge in 1912, and their former building was destroyed by German bombardment in 1940.

    Memento Mori...
     
  24. PX23 Member

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    It's like Louis CK's Bill Gates bit.

    "I think all the time about shit I would do with $85 billion. I was thinking about how I would open a chain of pet food stores all over the country and it would be called Shit Ass Pet Fuckers, that would be the name of it. It will be like Walmart. Just huge, Shit Ass Pet Fuckers, big yellow sign, people working in there rude to you, you walk in and like get the fuck out of here you idiot, nobody going to let you come in and if you get passed that, dog food costs $1 million dollars for one can, that’s the price, fuck you. And also if you come in, we’ll fuck your pet that’s the rule. You don’t even have to bring it, we’ll find it and fuck it. That’s the way it’s gonna be. Nobody will ever, ever spend a dime at Shit Ass Pet Fuckers, but I will keep it open for years and decades and never close, like, we’re doing great. Just surround every Starbucks with five Shit Ass Pet Fuckers all facing each other. Just to enjoy people going, what the fuck, why doesn’t it close, Jesus. That place sucks. Man, that is the worst pet store. I’m not paying $1 million dollars for a can of dog food, that’s clearly overpriced and they fuck your pets that’s not appropriate to fuck people’s pets, come on. Well, they’ve been opened for 50 years now, damn those Shit Ass Pet fucker people."
     
  25. Mider T Busting in and out of guts

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    They were closed because it was midnight and you were there smoking weed to hide it from your parents:C
     
  26. Cardboard Tube Knight Chika is god now.

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    I think it's like the Transco Tower in Houston, everyone still calls it by that name despite it being the Williams Tower now.
     
  27. SuperSaiyaMan12 The Seventh Hokage's arrived.

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    Guess my town's been the odd one out, its Sears always seems to have constant, consistent business. Always see the parking lot mostly full whenever there are peak shopping hours, and Sears Autobody is always getting consistent buisness. Might be why it seems not to be one of the Sears that are being forced to close (at least not yet), it consistently generates a profit.
     
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  28. mr_shadow Minister of State Security Moderator

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    Sears Holdings Corp won U.S. bankruptcy court approval on Thursday to move forward with plans to stay in business and sell itself, even as it continues to evaluate offers to liquidate its business.

    The 125-year-old retailer, which filed for Chapter 11 bankruptcy last month, faces opposition to its plan to sell from some creditors, who argued in court papers that Sears would be squandering hundreds of millions of dollars by pursuing a sale instead of winding down its business.

    To address the creditors’ concerns, attorneys for Sears said the retailer would be considering offers for its business from liquidation firms that sell companies’ assets in pieces and shut them down.

    Liquidators won an auction for the assets of sporting goods retailer Sports Authority in 2016 and then sold them off in pieces. Retailer Toys “R” Us decided to liquidate this year, shutting all of its U.S. brick-and-mortar shops.

    Ray Schrock, an attorney for Sears, told the court that liquidating Sears right away would destroy value, and potentially lead to the failure of profitable businesses, such as the retailer’s home services division.

    “We recognize that we have a tough task ahead to save the company,” Schrock said. Sears employs about 68,000 people.

    Sears filed for bankruptcy with its bank lenders promising to give it $300 million in bankruptcy financing. The retailer late Wednesday filed papers with the court showing that it had secured an additional $350 million bankruptcy loan from Great American Capital Partners, an affiliate of liquidation specialist Great American Group.

    The company faces a mid-December milestone to find a bidder for its approximately 500 remaining stores and other assets. Sears already announced it plans to close about 180 of its stores.

    Sears Chairman Eddie Lampert, a billionaire who runs hedge fund ESL Investments Inc, is working “around the clock” with possible lenders to finance a bid to keep Sears in business, according to bankruptcy-court papers.

    Lampert, who was Sears’ chief executive until it filed for bankruptcy, has loaned the company billions of dollars over the years, and plans to use some of the money he is owed to finance his offer for company assets, according to court papers.

     
  29. StarlightAshley Banned

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    Oh no all my investments in sears have went down the drain! :laugh:laugh
     
  30. Baroxio Unlimited Strategy Works

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    Sears was just another victim of Vulture Capitalism and Stock Buybacks. Just like Toys R Us and numerous other companies going out of business because they care more about the profit of their shareholders than about their business itself. Sad.
     
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