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Edward Lampert, The Hedge-Fund Star Who Bet on Sears, Is Unrepentant
It seems that many of these type of bankruptcies happen after somebody takes over and assumes an impossible debt load, while taking money out of the company and selling off assets (Craftsman tools and Kenmore appliances, for instance). I don't know if this is the case with Sears; the environment is really tough for old-line retailers who depend upon physical stores. I hate to see Sears go; OTOH, I have not shopped in Sears for many years. David
until recently bought appliances at sears. Maybe it will continue to exist in some form. i thought radioshack also filed bankruptcy right? I still see them.
Maybe it will continue to exist in some form. i thought radioshack also filed bankruptcy right? I still see them.
Filing chapter 11 gives Sears breathing room and protection for not being sued for not paying their creditors. They can restructure debt, which means people they owe money will likely get pennies on the dollar or nothing at all. Stock holders will get nothing. Bond holders may or may not get some payment. Assets or the entire company will either be bought by another company or, if they successfully come out of chapter 11 they can issue new stock for those believing Sears can some how reinvent itself minus the debt burden they once had.
I would guess Sears management had the goal over the last couple years of setting itself up for chapter 11 bankruptcy as opposed to chapter 7 where there would be no chance of restructure. It may have looked like management didn't know what they were doing, but their goal likely was not to be a great merchandiser again, but to keep itself in existence under the protection of bankruptcy courts.
Having seen all this take place with Kodak, the likelihood of reinventing itself after all this is slim to none. I wouldn't touch the new stock if issued at the end of this.
Comments
I don't know if this is the case with Sears; the environment is really tough for old-line retailers who depend upon physical stores. I hate to see Sears go; OTOH, I have not shopped in Sears for many years.
David
I would guess Sears management had the goal over the last couple years of setting itself up for chapter 11 bankruptcy as opposed to chapter 7 where there would be no chance of restructure. It may have looked like management didn't know what they were doing, but their goal likely was not to be a great merchandiser again, but to keep itself in existence under the protection of bankruptcy courts.
Having seen all this take place with Kodak, the likelihood of reinventing itself after all this is slim to none. I wouldn't touch the new stock if issued at the end of this.