Sears is an example of a company saved by a bankruptcy, an action that enabled it to keep its remaining retail stores open, including 17 locations in Oregon. A federal bankruptcy judge authorized the struggling retailer to sell its remaining assets to its chairman, as reported by USA Today.
Over the past 15 years, Sears shut down more than 3,500 retail locations. Its remaining 425 stores are now under the control of the company’s chairman and largest shareholder. The chairman offered to pay $5.2 billion in exchange for the assets left on the company’s balance sheet. According to the terms of the approved deal, he also agreed to provide the retailer with a cash payment of $885 million and assumed the retailer’s liabilities, which reportedly total more than $1 billion.
The purpose of filing for bankruptcy protection is so that your company may reorganize itself. To file, your business must present a schedule of its assets, liabilities, income and expenses to the bankruptcy court. You must also disclose your company’s current contracts, leases and other financial obligations. In addition, you may need to present a reorganization plan to a judge. A reasonable course of action for paying your business’s creditors over a period of time might also be necessary for your company to remain in operation.
By avoiding a complete liquidation, and going through with a bankruptcy reorganization, Sears is able to continue to operate. Its Kmart stores may also remain open with its employees’ jobs left intact.
This information is provided for educational purposes only, and should not be interpreted as legal advice.