CHICAGO, Illinois - One hundred and twenty six years after the giant retailer was founded, Sears on Monday voluntarily filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York.
Despite its predicament the company, officially known as Sears Holdings Corporation, was putting on a brave face Monday, describing the bankruptcy as part of a series of "Processes To Accelerate Strategic Transformation And Facilitate Financial Restructuring."
The company, which is headquartered in Hoffman Estates, a suburb of Chicago in Illinois, said it had received commitments for $300 million debtor-in-possession funding, and is negotiating $300 million junior debtor-in-possession financing.
Sears and Kmart stores, online and mobile platforms remain open for business, and operations will continue in their normal course, a Sears statement issued Monday said.
The company said it will continue streamlining its operating model and grow profitably for the long term.
The Company said it expects to move through the restructuring process as expeditiously as possible and is committed to pursuing a plan of reorganization in the very near term, as it says it continues negotiations with major stakeholders started prior to Monday's announcement.
Sears has filed a number of customary motions with the Court seeking authorization to support its operations during the restructuring process, to ensure a smooth transition into Chapter 11. The Company says it intends to continue payment of employee wages and benefits, honor member programs, and pay vendors and suppliers in the ordinary course, for all goods and services provided on or after the filing date.
Sears services and brand businesses will continue to operate as usual. Customers, the company, said should expect their loyalty programs, including the Shop Your Way membership program, and the Sears and private label credit card rewards programs, to continue as normal.
"Over the last several years, we have worked hard to transform our business and unlock the value of our assets," Edward S. Lampert, Chairman of Sears Holdings said Monday.
"While we have made progress, the plan has yet to deliver the results we have desired, and addressing the company's immediate liquidity needs has impacted our efforts to become a profitable and more competitive retailer. "
"The Chapter 11 process will give Sears the flexibility to strengthen its balance sheet, enabling the company to accelerate its strategic transformation, continue right sizing its operating model, and return to profitability," the Sears Holdings chairman said. "Our goal is to achieve a comprehensive restructuring as efficiently as possible, working closely with our creditors and other debtholders, and be better positioned to execute on our strategy and key priorities."
Sears says it intends to reorganize around a smaller store platform of EBITDA-positive stores. The company believes that a successful reorganization will save the company and the jobs of tens of thousands of store associates. Sears says it is currently in discussions with ESL regarding a stalking-horse bid for the purchase of a large portion of the company's store base. There can be no assurance that any transaction will be consummated or on what terms any transaction may occur. Additionally, Sears says it expects to market and sell certain of the Company's assets over the coming months.
142 unprofitable stores will be closed near the end of the year. Liquidation sales at these stores, the company said, are expected to begin shortly. The closures are in addition to the previously announced closure of 46 unprofitable stores that is expected to be completed next month.