Sears Holdings Corp, once the largest retailer in the U.S., has reportedly missed payments to vendors, adding to the concerns of its future. As per credible sources, the operator of departmental stores has been planning to file for bankruptcy over the coming days.
The firm has been missing scheduled payments over the last couple of weeks, three vendors stated.
The vendor problem wasn’t immediately clear of its extensiveness and the impact it would have on Sear’s supply chain ahead of the holiday shopping season.
According to sources familiar with the matter, the firm is also scrambling to secure funds for its estimated bankruptcy, which has been an unsuccessful attempt to date. If vendors feel that Sears cannot pay, its shipments are estimated to stop, resulting in the retailer’s freefall.
Arnold Kamler, Chief Executive Officer, Parsippany, and Kent International stated that he had withdrawn a shipment to Sears after it skipped a regular payment for the first time. The company went into business with Sears while being fully aware of the financial worries of Sears, Kamler added.
Sources stated that Vendors are usually perceived as unsecured creditors and gain very little off the dollars in bankruptcy court. As a result, securing huge funds can carry the firm through bankruptcy and boost confidence among vendors, reported sources.
Reportedly, the firm’s previous attempts with Bank of America and Wells Fargo to secure debtor-in-possession financing had turned out to be unsuccessful. Sears is planning to file for bankruptcy again and it will have to secure financing to avoid liquidation.
The retailer said that lately, its inventory has decreased in all categories, particularly apparels, tools, and outdoor living. As per the company’s most recent financial report, its inventory was $2.7 billion as of August 4, which depicts a decrease of nearly $719 million from a year ago, cite sources.