HOFFMAN ESTATES, Ill. — Sears Holdings Corp., the corporate parent of two storied firms that once ranked as the nation’s two largest retailers, filed for Chapter 11 bankruptcy earlier this month. The company’s reorganization plan calls for the closure of 142 additional Sears and Kmart stores, in addition to the previously announced closure of 46 unprofitable stores that is expected to be completed by November.
At the time of the filing, the company had 700 stores and 68,000 employees.
The Chapter 11 filing came after the company missed a $134 million debt payment.
In addition, Eddie Lampert, Sears’ chairman and chief executive officer and its biggest shareholder, stepped down immediately as CEO after the filing. He remains chairman. The company has appointed restructuring expert Mohsin Meghji, managing partner of M-III Partners, as its chief restructuring officer.
Lampert, who purchased Sears, Roebuck & Co. and merged it with Kmart in an $11 billion deal in 2005, is Sears’ biggest creditor through his hedge fund ESL Investments. He has been helping to keep the company afloat for years, primarily with billions of dollars of short-term loans. And he still is. Sears said ESL is negotiating a $300 million debtor-in-possession loan to support it through bankruptcy.
“Over the last several years, we have worked hard to transform our business and unlock the value of our assets,” said Lampert. “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 Holdings 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 retailer said 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. The company added that its Sears and Kmart stores, and its online and mobile platforms, will remain open for business, and said that it is committed to working with its vendors and other partners.
“As we look toward the holiday season, Sears and Kmart stores remain open for business, and our dedicated associates look forward to serving our members and customers,” Lampert stated.