Electrolux and Haier U.S. Appliance Solutions, Inc. d/b/a GE Appliances today announced they have ended their business relationships with Sears Holdings and have moved to reclaim all merchandise in Sears warehouses as well as Sears and Kmart retail stores, claiming the company has failed to pay for their goods and is unlikely to emerge from bankruptcy.
Haier and Electrolux are key suppliers and produce certain merchandise under the Kenmore brand. Last week, Whirlpool filed similar documents with the Bankruptcy Court calling back Kenmore-branded merchandise actually manufactured by Whirlpool.
Sources not authorized to speak to the media claim similar filings from LG, Samsung North America, and Daewoo are expected within days after Sears canceled an important hearing to provide details of a critical financing package from Edward Lampert, the former CEO of Sears. Sources say Lampert's original plans to offer $300 million in additional financing fell through on Wednesday after financial backers could not be assured of getting preferred protected status to be repaid if the company defaults on the new loan.
Vendors are also reportedly nervous about news that Seritage Growth Properties. Lampert's real estate investment trust, is rapidly faltering as a result of the larger-than-anticipated losses at Sears.
Bloomberg News reported the Sears bankruptcy and an ambitious redevelopment plan are likely to s--- $133 million a quarter out of the REIT’s bank account. Seritage says it has $580 million in cash and an additional $400 million in financing it can readily tap from a credit line from Berkshire Hathaway. But at that rate, Seritage will blow through nearly all of its cash within a year and its additional financing within two. And that’s if Sears is able to reorganize and emerge from bankruptcy with a good portion of its stores open. If Sears instead shuts down completely, Seritage and its shareholders could be wiped out sooner than that.
Sears is expected to run out of money as early as this week, making the next chapter in the Sears saga potentially its last.
An informal group of creditors is reportedly collaborating on their own financing package should Lampert fail to come up with additional funds. It would temporarily keep the lights on at the remaining Sears and Kmart stores but terminate nearly 75% of employees at Sears headquarters in Hoffman Estates, Ill., eliminate all regional management, suspend marketing and promotional spending -- including the demise of Lampert's touted Shop Your Way Rewards membership program, and develop an aggressive schedule with the help to individual store managers and liquidators to close all remaining Sears and Kmart stores by the end of January, 2019. Creditors would be paid from the proceeds of sales of stock on hand, selling off certain Sears properties and brands, and walking away from prior debts, utility and vendor payments, and taxes.