Offbeat: As Sears fights for its life, creditors say maybe it should die - PressFrom - US
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OffbeatAs Sears fights for its life, creditors say maybe it should die

22:11  12 november  2018
22:11  12 november  2018 Source:   bloomberg.com

Sears, chairman, lenders seek bankruptcy loan breakthrough: sources

Sears, chairman, lenders seek bankruptcy loan breakthrough: sources Sears Holdings Corp is in discussions with Chairman Eddie Lampert and lenders on a deal to expand a bankruptcy financing package that would help it avoid liquidation, people familiar with the matter said.

It 's a do-or-die Christmas for Sears and Kmart. Sears ' 133rd holiday season could be its last. The company plans to emerge from bankruptcy much It should start with its internal culture. CEO Eddie Lampert’s alienating management style and lack of retail prowess has prompted a mass exodus of

Sears ’ unsecured creditors say the retailer can’t be saved and Eddie Lampert’s plan to revive it amounts to a “foolhardy gamble with other people’s money.”.

Chairman Eddie Lampert wants to keep Sears Holdings Corp. alive, but a group of the company’s creditors say they’d be better off if Sears were dead.

The plan envisioned by Lampert amounts to “an unjustified and foolhardy gamble with other people’s money,” the unsecured creditors committee said in court papers on Friday. Staying in operation long enough to allow a sale would burn through as much as half a billion dollars, which should instead go to creditors, the group said.

Sources: Sears nears bankruptcy deal without Lampert's hedge fund

Sources: Sears nears bankruptcy deal without Lampert's hedge fund Sears Holdings is nearing a deal with new lenders to increase a bankruptcy financing package to as much as $600 million from $300 million without chairman Eddie Lampert's hedge fund contributing, people familiar with the matter said Monday.

, Unsecured creditors may try to block store sales to Lampert. They see rescue plan as ‘foolhardy gamble’ The company’s plan “appears to be nothing more than wishful thinking ,” it said , leaving Sears is next expected in court Nov. 15, when it will formally present its plan to keep the lights on

Still, Sears said in its Tuesday filing that it can't be sure it will be able to raise the cash to keep going. If it continues to experience operating losses and Sears ' creditors committee, which represents some of those vendors and various mall landlords, wants the bankruptcy court to pull the plug on Sears and

Sears filed for bankruptcy protection Oct. 15 after years of decline, and on Nov. 2 proposed to auction off its highest-performing stores. That could open the way for Lampert, Sears’s largest shareholder and creditor, to hold on to the best parts of the retail empire without spending a dime by making a so-called credit bid -- trading the debt he holds for ownership.

But Sears can’t be saved, the unsecured creditors group said. The company’s plan “appears to be nothing more than wishful thinking,” it said, leaving the group “no choice” but to request the bankruptcy court deny the request to pursue the store sale.

Representatives for Sears, based in Hoffman Estates, Illinois, and for Lampert’s ESL Investments Inc. couldn’t immediately be reached for comment.

Lampert keeps cash on sidelines as Sears touts sale plan

Lampert keeps cash on sidelines as Sears touts sale plan For once, Eddie Lampert is keeping his wallet in his pocket. Sears Holdings is closing in on a deal with new lenders to finance it through its bankruptcy, according to a person with knowledge of the situation. Lampert and his hedge fund, ESL Investments, won’t be participating. Then there’s the retail chain’s plan to auction off the highest-performing stores. That paves the way for Lampert, Sears’s chairman and former chief executive officer, to potentially hold on to the best parts of the retail empire by paying with debt rather than cash. Sears, once the dominant U.S.

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Court Date

Sears is next expected in court Nov. 15, when it will formally present its plan to keep the lights on through the holiday season and announce its deal with new lenders to help finance the next couple months of bankruptcy. The company is also looking to raise new cash through an auction of about $900 million of notes that are essentially loans from one Sears unit to another.

Securing new financing is crucial given the rate at which the company is spending, Sears lawyer Ray Schrock said Oct. 15.

“When you look at the cash burn associated with the overhead of the enterprise, it’s really something where things have to move very quickly,” Schrock said. “It really has to happen on an expedited time frame.”

Unsecured creditors include suppliers such as Whirlpool Corp. and Coca-Cola Bottling Co., vendors such as Waste Management National Services Inc. and landlords such as Simon Property Group Inc. Unsecured creditors are often among the last in line to get paid in a bankruptcy, assuming anything is left over for them after bank lenders and bondholders collect, and relations with Sears have turned contentious since the committee was organized on Oct. 24.

Creditor Concerns

Creditors complained earlier last week that various transactions in the years leading up to the bankruptcy raise the possibility that Lampert’s ESL and other insiders may have used “undue influence to siphon value away from the company on favorable terms,” according to court documents. The creditors also complained they’d received “limited to no information.”

ESL rejected the contentions in a court filing, calling them “divorced from the facts.” The transactions were “fair and reasonable,” according to ESL, which cited the lifelines Lampert and ESL have extended to keep Sears in business, as well as talks with the UCC since its formation. “The only reason the UCC has limited information is that it was appointed only two weeks ago,” ESL said.

It's a do-or-die Christmas for Sears and Kmart.
Sears' 133rd holiday season could be its last. The company plans to emerge from bankruptcy much smaller but profitable and competitive. But that might be wishful thinking. By next year, there's a very good chance the iconic retailer will be a ghost of Christmas past. "I'd say the chance of them making it to next year are no better than 50-50, and maybe not even that good," said Philip Emma, a senior analyst with Debtwire, a financial research firm. "They've got a pretty tough road ahead.

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