Sears on Verge of Bankruptcy as Debt Payment Looms
Sears Holdings appears to be getting its necessary financial filings in order as it prepares for a potential bankruptcy filing in the coming days.
According to a fresh report on CNBC, the parent company of the Sears and Kmart brands has been in contact with banks in recent days in order to arrange the financing necessary to complete that bankruptcy filing, people familiar with the situation told CNBC. The news of a pending bankruptcy filing sent the Sears Holdings stock down 32 percent in pre-market trading to 40 cents per share—it’s currently hovering at 48 cents as of this posting.
Beyond the contact made with banks, a CNN report noted that one of Sears’ major shareholders dumped roughly 142,000 shares of the company over the last few days, or nearly 8 percent of that investor’s total stake in the company. That move, the report said, could’ve been a sign that the investor was looking to cut come of their losses on the company as shareholders are typically “wiped out in a bankruptcy.”
Additionally, Sears Holdings has added a new member to its board of directors, Alan Carr, who is CEO of the restructuring advisory firm Drivetrain and has a lot of experience with bankruptcies and company restructurings. A separate Wall Street Journal report noted that the company has hired M-III Partners, which is a boutique advisory firm known to specialize in seeing companies through bankruptcies and restructurings.
Sears Holdings is a company that, as of earlier this year, employed some 89,000 people at its Sears and Kmart locations. That’s down significantly from the 317,000 U.S. employees they maintained a little more than a decade ago when the two brands merged. The company’s market cap has shed some $11.7 billion, according to the CNN report, since 2010, which also happened to be Sears Holdings’ last profitable year.