A group of Sears Holdings’ vendors is pushing for the company to liquidate, arguing they’re being pushed to the brink of insolvency as they wait to be paid back

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A group of Sears Holdings’ vendors is pushing for the company to liquidate, arguing they’re being pushed to the brink of insolvency as they wait to be paid back
A group of Sears Holdings’ vendors is pushing for the company to liquidate, arguing they’re being pushed to the brink of insolvency as they wait to be paid back

Shoshy Ciment/Business Insider

Some of Sears' vendors are pushing for it to liquidate.




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  • A group of 13 vendors filed an objection on Monday pushing bankruptcy judges to move Sears from Chapter 11 bankruptcy status to Chapter 7, effectively mandating liquidation that would cease operation.
  • The filing comes in advance of a Sears hearing slated for later this week, in which the company is expected to appear to seek a reorganization plan to settle its debts.
  • "No one wants the case to go into Chapter 7, but if the choice is between Chapter 7 and the plan, the vendors will do better in Chapter 7 because they can't do worse than they are now," David Wander, bankruptcy partner at Davidoff Hutcher & Citron LLP, told Business Insider.
  • Visit Business Insider's homepage for more stories.
Unpaid Sears vendors are not only fed up with waiting on delayed payments - some say they are now heading towards insolvency themselves. And, they're fighting for retribution.
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On Monday, a lawyer representing 13 vendors filed an objection requesting that the bankruptcy court rule to shift Sears' Chapter 11 bankruptcy status to Chapter 7, effectively requiring the department store chain to fully liquidate. The vendors join a group of now nearly 70 companies that have requested that Sears be pushed to liquidate in order to claim unpaid debts, according to the New York Post.

Joseph Sarachek - managing partner of The Sarachek Firm, which is representing the group of 13 vendors - wrote in the bankruptcy court filing that the companies "do not consent to waiting for an unknown period of time to be paid in full" and noted "they cannot afford to do so." Compounding vendor concerns is that the settlement plan as it stands presents "serious issues regarding whether the plan has been proposed in good faith."

The objection argues that several of the vendors are nearing insolvency themselves, as a result of Sears funneling money to legal counsel instead of paying its debts. The objectors argue that "for months, the professionals have been aware of the administrative insolvency of the estate," and exiting bankruptcy will only further deny vendors of money that they're owed.

"The objecting parties have been severely impacted by the debtors bankruptcy cases and are now being pushed closer to insolvency as a result of the proposed treatment under the plan," Sarachek wrote in the filing. "The time has come for the professionals for the debtors and creditors' committee to stop wasting the precious, little, cash on hand which rightfully belongs to administrative creditors."

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The effort comes in advance of proceedings scheduled for Thursday in which Sears Holdings, the former parent company of Sears, is expected to appear before the court seeking a reorganization plan to settle its debts. It also comes on the heels of a spate of layoffs in early September, in which current parent company Transform Holdco let go of 250 employees at its corporate headquarters in Illinois and confirmed a new round of store closures.

Sears did not immediately respond to Business Insider's request for comment.

The group of vendors includes several manufacturers and textile factories in Asia, as well as wholesale jewelry suppliers Helen Andrews and Beauty Gem, Inc., kitchen appliance provider Purcell Murray, and luggage company Forchier. Representatives from each of the companies were not immediately available to respond to Business Insider's request for comment.

Read more: Sears has laid off 250 employees at its corporate headquarters and will close dozens more stores

'They can't do much worse than being paid zero'

David Wander - bankruptcy partner at Davidoff Hutcher & Citron LLP and an attorney that represents four Sears vendors with claims - said in a call with Business Insider that the vendors are at risk of losing a significant amount of money in unpaid debt under the current settlement plan, largely due to the Sears estate burning through its remaining funds on legal counsel.

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"We're very concerned that the professionals are basically taking all the cash that's available. That's money that basically come from the vendors who supplied goods to the Chapter 11 debtor and have not been paid," he told Business Insider. "No one wants the case to go into Chapter 7, but if the choice is between Chapter 7 and the plan, the vendors will do better in Chapter 7 because they can't do worse than they are now. They can't do much worse than being paid zero."

In January, former CEO Eddie Lampert and a new company, Transform Holdco, won an auction to purchase Sears out of bankruptcy. Sears advisers accepted Lampert's bid, worth more than $5.2 billion, after two days of tense negotiations.

If you are a Sears employee with information on vendor and supplier issues, contact this reporter at bbiron@businessinsider.com.

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