https://www.google.com/amp/s/www.wsj.com/amp/articles/big-lenders-make-push-to-liquidate-sears-1539257424
Claim chapter 11 still leaves too much risk and total liquidation is best path forward.
14 replies (most recent on top)
Eddie's game of chicken is take my proposal or the company is done.
"They cautioned the situation is fluid and that Sears could still find another source of capital to prop it up through a restructuring."
Yeah...exactly where are they going to magically find this source of capital? Oh nowhere?! This is just some sort of spin to cover their butts?! Okay...
Eddie took too much real estate. Bankruptcy now is their best chance to collect the highest remaining percentage before the markets go into recession again
@tgv you still get paid the 15th. Going forward idk
If they file chapter 7, no paychecks on the 15th?
Yeah, its over.
That may mean SHLD can't get DIP. Makes sense; as he has stripped it of virtually all assets. He probably re-hypothecated many of his holdings.
Might be similar to renting a home to someone who always makes timely payments and everything seems fine. ... Until one day the renter informs the landlord he is going on vacation; which all seems normal. 3 payments are missed. The landlord attempts to enter the premises; but as he pulls on a door knob everything comes crashing down into a pile of dust. The place was empty. of any furniture The wires are gone; the floor boards are gone; the toilet is gone... even the studs that held up the ceiling... are gone.
By Suzanne Kapner and Lillian Rizzo
Updated Oct. 11, 2018 7:59 a.m. ET
Sears Holdings Corp. met with its lenders Wednesday night to discuss emergency financing for the embattled retailer, according to people familiar with the matter. The meeting ended without an agreement that would keep Sears operating as a going concern, according to one of the people.
A group of lenders, including Bank of America Corp., Wells Fargo & Co. and Citigroup Inc., are pushing for the company to liquidate its assets under a chapter 7 bankruptcy filing, as opposed to reorganizing the business under chapter 11, this person said.
A bankruptcy filing is expected by Monday when Sears must repay $134 million in loans, the people said. They cautioned the situation is fluid and that Sears could still find another source of capital to prop it up through a restructuring.
The Wall Street Journal first reported on Tuesday that Sears hired M-III Partners, a boutique advisory firm, to prepare a bankruptcy filing. The company, which had 866 Sears and Kmart stores as of Aug. 4, has been unprofitable for seven straight years and has closed hundreds of locations.
At Wednesday’s meeting, Sears proposed a restructuring plan to shrink its store base dramatically, at which point it expected to be profitable, the person said. But the banks argued the safest way for them to recoup their money is to sell all of the remaining stores and liquidate the inventory, the person said.
The banks are the principal lenders on a $1.5 billion asset-backed credit line secured by store inventory, as well as credit-card and pharmacy receivables. Asset-backed lenders are typically first in line to be repaid in full, often with the proceeds of liquidation sales in retailer bankruptcy cases.
The meeting Wednesday night in New York City included dozens of bankers, lawyers and advisers, but broke up after about an hour with no agreement reached.
It is unusual for a company like Sears, which hasn’t earned a profit since 2010 and has been working with advisers on restructuring efforts, to not have bankruptcy financing lined up this close to a potential filing, restructuring experts said.
Edward Lampert, the hedge-fund manager who controls Sears and is its biggest creditor, has repeatedly bailed out the struggling retailer with short-term loans. But the billionaire CEO doesn’t plan to lend the company money to make Monday’s payment, according to people familiar with the matter.
Last month, the CEO proposed an out-of-court restructuring that would slash more than $1 billion from Sears’s $5.5 billion debt load, divest another $1.5 billion of real estate and sell $1.75 billion of assets, including the Kenmore appliance brand, which Mr. Lampert offered to buy for $400 million.
The Sears board decided not to move forward with the Kenmore transaction, after it became clear this week that Mr. Lampert’s broader restructuring plan wasn’t winning support from creditors, another person said. That prompted the company to seek emergency financing from its lenders.
The company faces a cash crunch as it needs to stock its remaining Sears and Kmart stores for the holidays, and many vendors, from appliance makers to toy companies, now require Sears to pay upfront in cash. It needs several hundred million dollars just for this holiday season, one person said.
Although Mr. Lampert’s hedge fund, ESL Investments Inc., has sunk hundreds of millions of dollars of loans into Sears, the company also has borrowings with the major banks as well as some prominent investors.
As of September, its lenders also included Cascade Investment LLC, which manages the fortune of Microsoft Corp. co-founder Bill Gates, and hedge fund Fairholme Capital Management, whose manager Bruce Berkowitz left the Sears board last year.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com and Lillian Rizzo at Lillian.Rizzo@wsj.com
"Sears Creditors Push For Bankruptcy Liquidation As Vendors No Longer Paid"
https://www.zerohedge.com/news/2018-10-11/sears-creditors-push-bankruptcy-liquidation-vendors-no-longer-paid
Amid recent reports that Sears is set to file for bankruptcy as soon as this weekend ahead of a $134 million debt payment due on Monday, the only question is whether the filing will be a Chapter 11 debt for equity reorganization or a Chapter 7 liquidation. And contrary to the desires of Sears CEO and biggest creditor, Eddie Lampert, who would like to preserve the core business, others are pushing for an outright liquidation.
According to the WSJ, a group of Sears' biggest lenders, including Bank of America Corp., Wells Fargo & Co. and Citigroup Inc., are pushing for the company to liquidate its assets under a chapter 7 bankruptcy filing, as opposed to reorganizing the business under chapter 11, this person said.
The consensus reportedly emerged after Sears met with its lenders Wednesday night to discuss emergency financing for the embattled retailer. The meeting ended without an agreement that would keep Sears operating as a going concern, the WSJ reports.
"At Wednesday’s meeting, Sears proposed a restructuring plan to shrink its store base dramatically, at which point it expected to be profitable, the person said. But the banks argued the safest way for them to recoup their money is to sell all of the remaining stores and liquidate the inventory, the person said."
The meeting Wednesday night in New York City included dozens of bankers, lawyers and advisers, but broke up after about an hour with no agreement reached.
The banks are the principal lenders on the company's $1.5 billion asset-backed credit line secured by store inventory, as well as credit-card and pharmacy receivables. Their interest in a liquidation is simply so they get repaid instead of getting primed by even more secured debt. As a reminder, asset-backed lenders are typically first in line to be repaid in full, often with the proceeds of liquidation sales in retailer bankruptcy cases.
What is odd is that with a bankruptcy filing looming, Sears, which has been working with advisers on restructuring efforts, still has not lined up a DIP loan, i.e., a bankruptcy financing.
Meanwhile, hedge fund manager Edward Lampert, who controls Sears, and who has repeatedly bailed out the struggling retailer with short-term loans, doesn’t plan to lend the company money to make Monday’s payment, according to people familiar with the matter.
As much as I can see:
Sears Holdings Corp. met with its lenders Wednesday night to discuss emergency financing for the embattled retailer, according to people familiar with the matter. The meeting ended without an agreement that would keep Sears operating as a going concern, according to one of the people.
A group of lenders, including Bank of America Corp., Wells Fargo & Co. and Citigroup Inc., are pushing for the company to liquidate its assets under a chapter 7 bankruptcy filing, as opposed to reorganizing the business under chapter 11,...
Eddie is done and the big lenders are out. Its over.
Yea we need to see this one
Someone needs to copy and past this article that has access to wsj
Any chance you can post the text from the article for those of us without WSJ subscriptions?