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Bankruptcy looms for U.S. store giant Sears

Bankruptcy looms for U.S. store giant Sears

The committee has been resisting the plan amid concerns that creditors and shareholders would sue over it being too favorable for Lampert. The committee is concerned it will be opening the company up to litigation, one source said.

The Wall Street Journal quoted sources saying Lampert wants to restructure and is anxious that a bankruptcy filing will lead to a liquidation, which has happened with so many retailers, the most recent being Toys R Us.

Sears, once the world's largest retailer, has struggled in the face of declining foot traffic in its stores. It has suffered in the last decade because it did not specialize and was overtaken by online competition from Amazon.com Inc and other retailers.

Sears revealed Tuesday night that investor Bruce Berkowitz of Fairholme Capital Management dumped 142,000 shares of Sears in the last few days, for only 59 cents to 65 cents a share. Sears warned it could go out of business as it waits for approval from the committee on the deal.

The filing could come as early as this week in anticipation of the company's $134 million debt payment due Monday, the Wall Street Journal reported.

The Hoffman Estates, Illinois-based retailer has posted seven straight years of losses, while its sales have not grown since the 2008 financial crisis. When Lampert took over as head of the company five years ago, there were 2,000 stories.




In August, the board said it was weighing an offer from Lampert that Sears should sell its Kenmore brand and said ESL might offer to buy it if it was willing to sell.

In May, Sears said it plans to shut 72 locations by the end of third quarter to stem losses in the face of deepening financial distress.

The company has closed hundreds of stores and has put other famous brands on the block as it burns through money and sees more customers abandon its often-neglected stores.

Eddie Lampert, the American hedge fund manager, bought Sears in 2004 and merged it with Kmart, another department store chain, the year after.

A potential Sears Holdings (ticker: SHLD) bankruptcy could be a blessing for some real estate investment trusts, argues Wells Fargo . Seritage Growth Properties, which has master leases on 230 Sears stores, slid 4 per cent, CBL & Associates Properties lost 1.1 per cent and Pennsylvania REIT was down 0.5 per cent.


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