You Can Kick The Can Down The Road, But Reality Will Catch Up With You Eventually

Saturday, October 13, 2018
By Paul Martin

By Michael Snyder
TheEconomicCollapseBlog.com
October 13, 2018

Nobody can defy the laws of economics forever. Whether it is an individual, a company or the nation as a whole, reality always catches up with everyone eventually. For years, I have been warning that Sears was eventually going to zero, but of course it didn’t happen immediately. Sears CEO Eddie Lampert kept convincing investors to pour more money into his beleaguered money pit, and so the can kept getting kicked down the road. It takes a great con man to be able to pull off what Eddie Lampert was able to pull off, and we should all be in awe at the level of skill that he has displayed. But all good cons eventually come to an end, and now the retailer that was once the largest in world history is coming to an end. According to multiple media reports, a Sears bankruptcy filing is imminent. For a while there it looked like it would be a Chapter 7 filing which would mean immediate liquidation for Sears. But it appears that Lampert will be able secure enough funding to give Sears a little bit of breathing space. A Chapter 11 bankruptcy filing will allow most of the stores to stay open through the holidays and will give Sears more time to sell off more assets.

I can’t even imagine who would be dumb enough to hand Lampert more money at this point, and this is yet another example that shows that the old saying “a sucker is born every minute” is definitely true.

And we are not talking about a small amount of money. According to USA Today, Sears is going to need between 300 and 500 million dollars just to keep operating through the holidays…

It is trying to secure $300 million to $500 million to continue functioning through the holidays, keeping a winnowed number of locations open, says the person familiar with what is being considered. As of an Aug. 4 public filing, Sears Holdings, the parent company of Sears and Kmart, still had 506 Sears stores and 360 Kmart locations.

If the bankruptcy filing occurs, it is likely the beginning of what has been the long, drawn-out ending to one of the most renowned sagas in retail.

Lampert is going to be burning up the phones all weekend, because Sears needs cash immediately for a 134 million dollar debt payment that is due on Monday…

Now, Sears is facing a critical Monday deadline to make a $134 million debt payment. Reports this week by the Wall Street Journal and CNBC said Sears had begun consulting with advisers to prepare a possible bankruptcy filing.

Just like our current stock market bubble, it is absolutely amazing that Sears has survived for as long as it has.

The truth is that Sears should have been put out of its misery long ago, but the can just kept getting kicked down the road. But now the cash is gone and the debts have become overwhelming.

At this point, Sears has been missing payments to important vendors and has been making preparations for the upcoming bankruptcy filing for weeks…

Three companies that sell items at Sears told Reuters this week that Sears had missed payments to them over the past few weeks. One of Sears’ major shareholders recently dumped a chunk of his stock for pennies on his original investment. The company added a new director this week who is familiar with bankruptcies and restructuring.

And reports are swirling that the company is talking to advisers and banks in preparation for a bankruptcy filing. According to the Wall Street Journal, Sears has hired M-III Partners, a boutique advisory firm specializing in seeing companies through bankruptcies and restructuring, The company is also talking to lenders about providing it with debtor-in-possession financing, CNBC reported. That kind of loan is used by companies that file for bankruptcy to fund operations during the process. Usually, funding is secured well before the final days.

The Rest…HERE

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