Sears files for Chapter 11 bankruptcy protection

Sears Holdings will close more than 140 Sears and Kmart stores nationally, after declaring bankruptcy Monday and its controlling shareholder Ed Lampert stepping down as CEO but offering $300 million in new financing via his ESL Investments hedge fund to help the iconic American retailer stay afloat.

Hoffman Estates, Ill.-based Sears filed for Chapter 11 protection from creditors in the U.S. Bankruptcy Court for the Southern District of New York, with the goal of closing or selling unprofitable stores and staying in business with those that are cash-positive.

Sears stated the goal of completing store closures near the end of the year, without immediately publishing a list of stores slated for closure. In southwestern Connecticut, Sears has department stores at Danbury Fair mall and the Connecticut Post mall in Milford, as well as in Manchester, Meriden and Waterford. The company is in the process of closing a Milford Kmart among more than 45 stores nationally.

Sears lists the U.S. Pension Benefit Guaranty Corp. among its unsecured creditors, without stating how much it is owed. Of amounts specified, lenders holding notes administered by an affiliate of BNY Mellon are owed the largest amounts at more than $2.4 billion. The company’s largest Connecticut creditor is the New Britain-based tool giant Stanley Black & Decker, owed $5.9 million, with other household brands owed large amounts including Whirlpool, Frigidaire, Daewoo, Samsung and Cardinal Health.

“Over the last several years, we have worked hard to transform our business and unlock the value of our assets,” Lampert stated in a Monday press release. “While we have made progress, the plan has yet to deliver the results we have desired. … As we look toward the holiday season, Sears and Kmart stores remain open for business.”

Under Lampert’s plan, ESL would make a “stalking horse” bid for Sears stores that would allow other bidders to enter any auction with better offers, with Lampert remaining chair of the board of directors and ESL having a 49 percent equity stake in Sears. Management of Sears day-to-day operations shifts to a committee of Robert Riecker, chief financial officer and executives overseeing Sears’ digital, customer and apparel operations. Sears also appointed a chief restructuring officer in Mohsin Meghji, a partner of the turnaround management firm M-III Partners.