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Sears to remain open as bankruptcy court approves financing


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Sears to remain open as bankruptcy court approves financing

A bankruptcy court in New York approved a $300 million financing deal to keep Sears Holdings Corp. in business through the holiday season, according to an Oct. 15 release.

The troubled department store chain filed for bankruptcy protection earlier in the day.

Sears received authorization to access its $300 million in senior priming debtor-in-possession financing from its senior secured asset-based revolving lenders. It also received authorization to continue paying employee wages, and to honor member programs including warranties and promotions.

The company is also negotiating a $300 million subordinated debtor-in-possession financing with resigned CEO Eddie Lampert's hedge fund ESL Investments to support the business during the financial restructuring process.

The company plans to operate its Sears and Kmart chains normally under Chapter 11 transition, along with their online and mobile platforms, in addition to other services and brands operated by the company.

However, it still plans to close 142 unprofitable stores near the end of the year, in addition to the 46 stores expected to be closed by November.

Major suppliers like Whirlpool Corp. and AB Electrolux have released statements about the effect of Sears' bankruptcy on their businesses.

Whirlpool said it expects the proceedings to have a limited impact on its operations, as the company's aggregate accounts receivable exposure to Sears was only about $30 million, or 1%, as of Sept. 30.

Swedish manufacturer Electrolux said that while the outcome of the Sears restructuring was unclear, it is not discounting the possibility that the bankruptcy will have a material impact on the future sales and earnings of its North American major appliances division. Sears accounts for about 10% of the unit's sales.

Shares of the company will be delisted from Nasdaq following the bankruptcy filing, Sears said in a same-day SEC filing.