Just about everyone in America has heard of Sears. They have been selling us anything from jack-hammers to mittens for over a century. The giant has been wobbling for some time and now they are officially filing for chapter 11 bankruptcy protection. Sears is one of the more notable victims of the “online shopping era”.
A Little Background on Sears
Sears began as Sears, Robuck, and Company in 1892. They were, at one time, headquartered in the Sears Tower in Chicago. They started off as a private company, but in 1906 they launched a successful IPO. Sears is known as one of the first companies to offer their products in an extensive catalogue. At one time, their catalogue grew to 532 pages! More recently, Sears merged with Kmart which most people believe was the beginning of the end.
The Kmart Merger
In 2004, after completing its own bankruptcy, Kmart declared that it was merging with Sears. The $11 billion acquisition yielded a profitable 2006 ($1.5 billion), but soon began to see sales slump. Between 2011 and 2016, it was reported that Sears lost over $10 billion. In 2014, Sears began selling off properties and brands to pivot into the technology sector, but by then they were rapidly losing market share to companies like Wal Mart and Amazon.
Chapter 11 Bankruptcy
On October 15, 2018, Sears announced that they were seeking chapter 11 bankruptcy protection. The CEO, Eddie Lambert, stepped down and three top Sears executives were appointed to see the company through bankruptcy. Additionally, Mohsin Meghji, was named Chief Restructuring Officer. The current proposed restructuring plan is to:
- Close 142 stores worldwide.
- Begin liquidation sales by the end of the year.
- Focus on the most profitable 400 stores and keep the 68,000 employees working.
Sears is already over $4 billion in debt and the former CEO of Toys ‘R’ Us (for more information on Toys ‘R’ Us’ recent bankruptcy, see Why Did Toys ‘R’ Us Go Bankrupt?) recently commented, “Sears is essentially dead already”.
Bankruptcy can be a terrifying prospect. The truth is, bankruptcy is a tool to help you or your business get back on track. If you are considering bankruptcy as an option, you need the skills of an experienced attorney. Elias Dsouza has been helping people and businesses get back on track for over 15 years. Contact Elias for a free consultation today.