DETROIT (Michigan News Source) – What started off well in 2012 is coming to a rapid halt as the Sears affiliate company recently filed for bankruptcy.
On Monday, Sears Hometown filed for Chapter 11 bankruptcy listing assets not greater than $50 million and liabilities of at least $50 million in its bankruptcy court petition. These cases are separate from the 2018 Sears Holdings Corp. bankruptcy.
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“What is happening here is this company is going out of business,” Mark Minuti, an attorney for Sears Hometown, said during the company’s first bankruptcy hearing. “Make no mistake about it: this is a sad day for our company.”
The offshoot of the once monolithic retail store, Sears, whose hayday was largely in the 20th century, provides hardware and other home and garden appliances to independently owned Sears-branded stores, who receive a commission for sales. Minuti said that the bankruptcy will deprive those store owners of their sole supplier.
When Sears and Kmart experienced a merger in 2005 under the oversight of TransformCO CEO Eddie Lampert, he was optimistic that both would experience a new boom. Rather, both stores have experienced tremendous decline and lost thousands of stores since the merger. According to Forbes, by 2019 there was only 12% of the estate – 223 Sears and 202 Kmart stores nationwide – left from the merger 14 years prior.
Just three years ago, Lampert and 500 Sears Hometown stores were armed with optimism that the stores could return some vibrance to the company.
“We are excited to bring Sears Hometown, its associates and network of independent dealers and franchisees back into the Sears and Kmart family. Our investment demonstrates our commitment to growing Transform,” Lampert said.
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The nearly 100 Sears Hometown stores that have closed this year alone would speak to the contrary. Court papers also reveal sales have dropped as supply costs have also risen. In October, Sears Hometown ran afoul of a debt covenant embedded in a credit line with PNC Bank NA, and part-owner and major supplier TransformCo began restricting the shipment of new inventory according to the Detroit News.
The case is Sears Authorized Hometown Stores LLC, 22-11303, U.S. Bankruptcy Court for the District of Delaware.
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