US Bankruptcy Court Approves Sears’ Decision to ‘Stay in Business, Sell Itself’
Unlike the Chapter 11 bankruptcy whirlwind that struck Toys R Us more than a year ago, Sears is finding success in its Ch. 11 filing after the U.S. Bankruptcy Court approved the department store's plan to "stay in business and sell itself." The announcement was made about a month after Sears filed for Ch. 11 to the dismay of some credit managing business partners.
According to Retail Dive, the 125-year-old department store filed for Ch. 11 in October, with plans to close 142 stores in addition to 46 stores they had already been planning to close. On Nov. 15, Reuters reported, Sears' decision coincided with a $134 million debt payment on behalf of the retailer, whose plans rattled credit managers.
Creditors argued that "Sears would be squandering hundreds of millions of dollars by pursuing a sale instead of winding down its business," Reuters states. "To address the creditors' concerns, attorneys for Sears said the retailer would be considering offers for its business from liquidation firms that sell companies' assets in pieces and shut them down."
With approximately 68,000 employees across the retail chain, Sears attorney Ray Schrock informed the court of the detriments of immediate liquidation, such as harming Sears' value. As of this week, Sears secured a $350 million bankruptcy loan from Great American Capital Partners, as shown in court records, as well as the $300 million bankruptcy financing it promised at the time of the Ch. 11 filing.
—Andrew Michaels, editorial associate