Big Lenders Make Push To Liquidate Sears
Sears Holdings may be liquidated in the wake of a meeting Wednesday with several of the struggling retailer’s biggest lenders that did not result in concrete plans to ensure the firm continues operations, The Wall Street Journal reported.
The meeting had centered on emergency financing for the firm, which then ended without agreement on the firm’s continuance as a going concern, the financial publication stated, citing unnamed sources.
The lenders included Bank of America, Citigroup and Wells Fargo. The WSJ said the trio wants Sears to liquidate, which means a Chapter 7 bankruptcy filing. The other option would have been a Chapter 11 filing, which is in effect a reorganization of the company.
The banks have agreed to debtor in possession financing, but only to the extent that Sears sells off its assets and shutters locations.
Discussions are still underway, but as has been widely reported, a bankruptcy filing may come as soon as Monday. The company is on the hook for a $134 million loan repayment, and the banks are the lenders on $1.5 billion in asset-backed credit, in turn secured by inventory.
The store count now stands at 866 Sears and Kmart locations, and the decline has been a long one, stretching out over seven years. Though Sears has been closing locations – and the company said at the Wednesday meeting that more closures would result in eventual profitability – the lenders are reportedly pushing for liquidation.
The company had, through CEO Eddie Lampert, proposed an out-of-court revamp that would have taken $1 billion in debt off the current $5.5 billion load, offloaded real estate and sold off the Kenmore appliance brand for as much as $400 million, to Lampert himself. The board of directors had decided against the Kenmore sale.
In the meantime, reported The WSJ, the company’s vendors have been stipulating that Sears pay upfront in cash for its inventory as the holidays loom.
Related Items:Bank of America, bankruptcy, Chapter 11, Chapter 7, Citi, Loan Liquidation, News, Retail, Sears, wells fargo, What’s Hot
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