Retail industry giant Sears Holdings Corp (NASDAQ:SHLD) succumbed to debt burden and filed for bankruptcy a couple of days ago. The department store chain dominating the retail landscape of the US for decades could not cope up with the piling debt and failure of several years. The company failed to adapt to the changes and upheavals in the retail industry.
Ten thousand and more employees to become jobless
The problem arose when Eddie Lampert, the chairman and chief executive of the company failed to convince the directors and creditors his latest plan of revival. Ten thousand and more workers relying on the billionaire who led the company for around 14 years now are jobless.
The retail industry giant continued to drag the business despite losing $10 billion by the turn of this decade. It filed for bankruptcy in New York’s US Bankruptcy Court on the day loan amount of $134 million was due.
According to the head of the bankruptcy practice at McKool Smith law firm, Hugh Ray, some of the lenders implied that the company received enough of second chances and now it is the end of it. Some of the investors and lenders stated that there is a possibility that the retailer might opt directly for liquidation.
However, Mr. Lampert still has high hopes and believes that Sears Holding still stands a chance to escape such a phase. He thinks that restructuring the system around smaller store platforms can be the solution.
In his statement, Lampert said,” The Chapter 11 process will give [Sears] Holdings the flexibility to strengthen its balance sheet, enabling the company to accelerate its strategic transformation, continue right sizing its operating model, and return to profitability.”
Lenders provided around $300 million in the debtor-in-possession funding to ensure that the retailer keeps operating even during the bankruptcy phase. The report indicates that the retail company will have to shut down at least 142 stores and will initiate the liquidation sales very shortly.
Retail industry giant CEO to contribute $300 Million through his ESL fund
Last month the retail industry giant announced receipt of a proposal from ESL Investments. The hedge fund headed by Lampert sent a proposal of offering $300 million to the Board of Directors of Sears Holdings that will help the company manage its liability and real estate transactions.