- Sears is about to find itself in a dire cash situation, according to court filings reported by Bloomberg.
- The company is relying on a $US300 million bailout from former CEO Eddie Lampert. Without this, it could be forced to liquidate in as soon as two weeks from now.
- The department store has been closing stores and losing money for years. It has stayed afloat thanks to Lampert bailing it out with billions of dollars in loans through his hedge fund, ESL Investments.
Sears’ turnaround effort is looking even more difficult than expected.
According to court filings reported by Bloomberg, the retailer is about to find itself in a dire cash situation just days after it secured $US300 million in funding from lenders upon bankruptcy.
The documents show that the retailer is expected to burn through $US220 million of this cash within the first month of bankruptcy, which is making it completely dependent on an additional loan from its controversial former CEO, Eddie Lampert, via his hedge fund ESL Investments.
A representative for Sears did not immediately respond to Business Insider’s request for comment.
According to a budget approved by the court, Sears is expecting to receive a $US112 million loan from Lampert by November 3 and another $US188 million over the next two months.
In the court filing, Sears said that the additional loan “will not be required for the Debtors to operate during the first two weeks of these cases, but will become necessary thereafter,” Bloomberg reported.
ESL Investments declined to comment on the matter to Business Insider.
The company filed for bankruptcy on Monday and announced it would be closing an additional 142 Sears and Kmart stores before the end of the year. Lampert stepped down as CEO but is staying on as chairman.
Sears has been losing money and closing stores for years, and many employees blame Lampert for its struggles.
However, the department store has managed to stay afloat thanks to Lampert bailing it out with billions of dollars of loans through ESL Investments.
Read more about Sears’ downfall:
- ‘There were mistakes along the way, for which I take responsibility’: Eddie Lampert addresses Sears employees day after bankruptcy filing
- Sears is shuttering 142 stores with liquidation sales starting immediately – here’s the complete list of closing stores
- Sears, once the largest retailer in the world, has filed for bankruptcy and is closing 142 stores. Here’s how it got there.
- ‘I’ve decided to step down as CEO’: Eddie Lampert sends email to Sears employees after the company files for bankruptcy
- Sears is closing hundreds of stores and keeping the rest open through the holiday season – but shoppers won’t get the blowout deals they might be expecting
- Sears has filed for bankruptcy and is closing stores. Here are the retail rivals who could benefit the most from its downward spiral.
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