Question

Why did Sears file bankruptcy? What are the ramifications of Sears filing a bankruptcy? more of a discussion in 300 words.

Answer 1

Sears, once was America's most iconic retailer, is now reportedly on the verge of bankruptcy.

Sales have fallen to about its  half since 2014, and the company is burning through cash, closing hundreds of stores, and slashing jobs in an attempt to snatch the bleeding. With millions of debt repayment deadline, the company is in the verge and is now Preparing for a bankruptcy.

This move would enable the Sears to restructure in terms of hopes of reemerging from bankruptcy with part of the business still standing.

The major ramification or consequences of bankruptcy of Sears are as follows:

• As part of the bankruptcy filing, the company announced it will close around 142 stores by the end of the year, in addition to 46 locations that were already slated to close by the coming month.

• It's possible the company will also sell off real estate and other assets.

• Lenders, which mainly include banks like Bank of America, Wells Fargo, and Citibank, will be repaid according to a court decision. Generally, secured lenders are supposed to paid back before the unsecured ones.

• Considering the case that Sears has several billion dollars more in liabilities than assets, shareholders may very likely be wiped out, as indicated by the fact that shares had fallen to less than $0.50 before the bankruptcy declaration.

• The many Sears employees, who are around 140,000 in numbers as of last year, are likely to be jobless soon.