Is Sears on the Verge of Bankruptcy?

Sears Holdings

Sears Holdings has until Oct. 15 to pay its outstanding debt amounting to $134 million or it risks filing for bankruptcy.

Sears’ CEO and major shareholder Eddie Lampert proposed to the company’s board a $5 billion debt restructuring to spare shareholders from being wiped out, as is often the case in a bankruptcy.

He also proposed selling Sears’ real estate and other assets to raise the money ┬áthat they need to pay the debt. In fact, in a letter which he sent to the board earlier this year, Lampert expressed interest in buying the company’s Kenmore appliance brand for $400 million, but the board hasn’t responded to his offer yet.

Getting all the help it needs

Image: Sears | Sears Store in LA 1943
Image: Sears | Sears Store in LA 1943

Sears shows all the signs of a troubled company.

Aside from one of its major shareholders selling 142,000 of his shares in the company for 59 cents to 65 cents a share, Sears added Alan Carr, CEO of restructuring firm Drivetrain, to its board of directors.

The company has also hired boutique advisory firm M-III Partners and requested lenders to grant it a debtor-in-possession financing.

“Together, we believe these transactions would contribute to a comprehensive solution to create a viable and healthy Sears and would provide greater value to all stakeholders than would be available in pursuing other alternatives.” – Eddie Lampert, Chief Executive Officer, Sears Holdings

What’s to become of Sears after the filing?

It’s hard to tell what the future of Sears will be should it file for bankruptcy.

Though the company could get out of debt and might be able keep its business, its current situation just paints a bleak future.

Sears’ has lost a total of $11.7 billion since 2010, its last profitable year. Also, it has shut down hundreds of stores and plans to close 46 more before the holiday shopping season kicks off.

Is this the end of an iconic store? Let us know what you think in the comments below or over in our Facebook Group.