Published 5:56 PM EDT Oct 15, 2018
WHITE PLAINS, N.Y.— Following its late-night Chapter 11 bankruptcy filing, Sears attorneys were in court Monday urging a swift bankruptcy to preserve the company as a smaller entity.
“For us, time is absolutely of the essence,” said Ray Schrock of Weil, Gotshal and Manges representing Sears Holdings. “We have to do this for Sears and its employees.”
At the hearing in U.S. Bankruptcy Court in the Southern District of New York, Schrock proposed an accelerated timeline to decide the fate of another batch of stores as well as a financing plan for the stores that remain.
Sears has proposed having its Chapter 11 reorganization plan filed by late December and confirmed in March 2019.
One critical date is Nov. 15, when it plans to make a decision about its so-called "bubble stores" that are being reviewed to see if the lease terms can be renegotiated and if ways can be found to make them profitable.
More: Once nation's top retailer, Sears files for bankruptcy. A timeline of its rise and fall.
More: Which stores are closing? The list of 142 more Sears, Kmart locations
More: Controversial Sears boss Eddie Lampert might be the company's last hope in bankruptcy
The sole bidder right now is Eddie Lampert’s ESL investments but Schrock said, “We are prepared and will be marketing those assets.”
Dec. 15 is another critical date in which Sears is aiming to have financing in place for its remaining stores.
Schrock said that the better part of a week was spent with key lenders Bank of America, Wells Fargo and Citigroup to secure financing. And the group reached agreement on a plan that would include the provision that the first $200 million of proceeds from the sale of certain assets would be placed in a reserve account to make sure the company can pay severance and other costs.
He also noted that, while the company has 12,000 vendors, “Trade credit has been substantially limited coming into Chapter 11.”
That credit has been reduced 78 percent leading to Sears' shrinking inventory and increasing its borrowing to secure merchandise.
The judge, the Hon Robert Drain, granted interim approval of payments of $70 million and $90 million to critical vendors, adding that they are, "by definition, necessary.”
The hearing covered a wide range of payment obligations from shipping and warehouse fees to severance for workers whose stores will be closing to its product returns programs.
Follow Charisse Jones on Twitter: @charissejones