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Non-Tech : Sears Holdings Corp.
SHLD 31.370.0%Oct 8 12:00 AM EST

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From: Glenn Petersen10/10/2018 9:57:39 AM
   of 951
 
Sears Hires Advisers to Prepare Bankruptcy Filing

Troubled retailer working with boutique firm M-III Partners and could file for court protection ahead of Monday debt payment

By Suzanne Kapner and Lillian Rizzo
The Wall Street Journal
Updated Oct. 9, 2018 10:51 p.m. ET




Sears, which has been losing money for years, has $134 million in debt due on Monday. Photo: Scott Olson/Getty Images
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[url=http://quotes.wsj.com/SHLD]Sears Holdings
Corp. SHLD -28.22% has hired M-III Partners LLC to prepare a bankruptcy filing that could come as soon as this week, according to people familiar with the situation, as the cash-strapped company that once dominated American retailing faces a debt payment deadline.




Employees at M-III Partners, a boutique advisory firm, have spent the past few weeks working on the potential filing, the people said. In recent days, M-III staff have been at the retailer’s headquarters in Hoffman Estates, Ill., one person said. Sears continues to discuss other options and could still avert an in-court restructuring, the people added.

Sears, which has been losing money for years, has $134 million in debt due on Monday. Edward Lampert, the hedge-fund manager who is Sears’s chairman, chief executive, largest shareholder and biggest creditor, could rescue the company, as he has done in the past by making the payment.

But Mr. Lampert is pushing for a broader restructuring that would include shaving more than $1 billion from Sears’s $5.5 billion debt load, selling another $1.5 billion of real estate and divesting $1.75 billion of assets, including the Kenmore appliance brand, which he has offered $400 million to buy himself.

The company’s poor financial performance has made it difficult to get support from lenders for the plan, one of the people said. Mr. Lampert hopes to shrink Sears back to profitability, this person said. The company has already closed hundreds of stores in recent years.

Sears has more than $11 billion in cumulative losses since 2011, and its annual sales have dropped nearly 60% in that period to $16.7 billion. Analysts say it needs to raise more than $1 billion a year to stay afloat.

Mr. Lampert has also sought advice from consulting firm AlixPartners; lawyers at Weil, Gotshal & Manges LLP; and investment bank Lazard Ltd., as he tried to keep the company afloat and restructure out of bankruptcy court, the people said.

On Tuesday, Sears added restructuring expert Alan Carr as a director, expanding the six-person board to seven. Mr. Carr runs a restructuring advisory firm and previously worked as a restructuring lawyer at Skadden, Arps, Slate, Meagher & Flom LLP. He has also served on the board of companies—including wireless-networking business LightSquared Inc. and guitar maker Gibson Brands Inc.—that have recently navigated the bankruptcy process.

Once hailed as a genius investor for smart bets he made on AutoZone and AutoNation , Mr. Lampert met his match in Sears, Roebuck & Co. The retailer was struggling before he combined it with Kmart, which he rescued from bankruptcy, to create Sears Holdings Corp. in 2005.

He moved quickly to cut expenses and close unprofitable stores. But the business worsened coming out of the recession, as more purchases were made online and rivals such as Walmart Inc. and Amazon.com Inc. grew stronger. The company wasn’t helped by Mr. Lampert’s unconventional approach to retailing. He resisted investing in store upgrades and, after becoming CEO in 2013, managed the company from Florida, according to people familiar with the situation.

Mr. Lampert wants to restructure Sears’s debt without filing for bankruptcy protection, because he views bankruptcy as risky for retailers, according to a person familiar with his thinking. Retailers often enter bankruptcy with the hope of restructuring but wind up liquidating instead, as was the case this year with Toys “R” Us Inc., this person said.

Mr. Lampert, whose hedge fund ESL Investments Inc. owns a majority of Sears shares, also believes the company can get more value for its assets by selling them while it is a going concern, this person added.

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