Like this is stock market and financial stuff, but that by actually clearing the debt and interest payments making it impossible to run the business, will make it possible for Sears and Kmart to run stores profitably without the higher costs of procuring inventory?
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Can the company be saved?
NO.
Have you not been paying attention for FOURTEEN YEARS????
I wonder about the possibility of closing all the stores and simply retaining the online presence, Home Services, and PartsDirect. Thus the company would technically survive, but most all employees would be gone.
The man in charge does NOT value Sears and Kmart. He choked operations, he does not shop there, he has high level people working for him that do not shop there AND these C level types do not have many points on the SYW platform. This means that Eddie Lampert and His C Suite staff do not BELIEVE in the company. What do you think is going to happen?
His famous statement of "fighting like hell" meant him fighting like hell to make money for HIMSELF.
No.
Not to mention that the other creditors will get the Court to really drill down on every transaction Eddie and ESL have executed with Sears, as to whether each one satisfies the "Fairness Doctrine" and protected the interests of all shareholders. (Hint: they don't).
That will get very complicated and ugly, and will probably prevent keeping SHLD on any kind of operational footing.
I believe the debt is at a 300% to asset value in bankruptcy. To make anything work other than liquidation you have to convince all debtors vendors bond holders customers and a judge that they can make a operational and last to 2021. I can tell you for a fact that most stores in nice malls in growth areas are not making a profit. And that's with everything stripped down to bare necessity's to run stores.
There is a lot that the bankruptcy court can do to help the issues, but there are powerful headwinds that the company will face afterward.
They can convert ESL's secured debt to equity, and force their debt lower on the repayment schedule, forcing them to take a haircut along with all of the other unsecured creditors.
They can change rent agreements, allowing the company to break leases and close more locations, and eliminate debt on early terminations for already closed locations.
They can force the sale of remaining ownerships of Lands end and Craftsman.
But with the company so upside down, it is probable that there won't be enough equity to satisfy existing debts, and leave a meaningful pool of assets to leverage operations to allow a comeback.
Ultimately, and to no one's surprise, this is a liquidation event.