Sears (Sears Holdings Corporation) filed for bankruptcy protection under Chapter 11 in the Southern District of New York on Monday. Long an icon in American retail—with the delivery of its catalog lighting up children's faces all over the country—Sears has fallen on hard times. Its stock had fallen from around $6 a share a year ago to just under $1 prior to the bankruptcy. Once boasting over 4,000 stores and 350,000 employees, it now operates 687 stores (including Kmart stores, with which Sears merged in the mid-2000s) and has about 68,000 employees.
In addition to the 46 store closings previously named, Sears announced as part of the bankruptcy filing that it plans to close another 142 unprofitable stores—including stores in Central Florida—with those closings to begin imminently.
Though Sears states a hope to once again emerge from Chapter 11 as a viable reorganized company, there are serious questions about whether such hopes are realistic. While still owning the powerful Kenmore appliance brand, Sears has sold off some of its more valuable assets in recent years—namely, the Craftsman tool line in 2017.
This bankruptcy case will have significant impacts throughout the retail and real estate industries. Vendors and landlords should expect that the case will take quite some time to work its way through the bankruptcy process, but should immediately consult competent bankruptcy counsel to see if they are listed in motions already filed by Sears to deal with critical vendors and to reject unexpired leases, and to determine how this case may otherwise impact them.
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