Early on Monday, Oct. 15, 2018, Sears Holdings initiated processes to voluntarily file Chapter 11. The company announced a series of actions to try and save itself by establishing a sustainable capital structure, streamlining its operating model and growing profitably for the long term.
Current CEO Edward S. Lampert will step down from his role and Mohsin Y. Meghji the company’s Chief Restructuring Officer and William L. Transier as New Independent Director will form an independent restructuring committee. Sears also announced it will close 142 unprofitable stores near the end of the year with liquidation sales to be announced. These store closures are in addition to the previously announced closure of 46 unprofitable stores expected to be completed by November 2018.
Sears received commitments for $300 million in senior priming debtor-in-possession financing from its senior secured asset-based revolving lenders and is negotiating a $300 million subordinated DIP financing with ESL Investments, Inc. Sears 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.
“Over the last several years, we have worked hard to transform our business and unlock the value of our assets,” said Edward S. Lampert, Chairman of Sears Holdings. “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,” Lampert said.
Sears and Kmart stores will remain open for business for the holiday season.