Economic Hail Mary

In 1893 the very first Sears was founded by  Richard Warren Sears, in Chicago, Illinois. Selling things Appliances, Tools, Clothing, and Electronics, the franchise boomed and spread across the globe. Though this business was once profitable, it has recently undergone a large decline in profit. Mainstream stores like Walmart and HEB became the new “place” causing Sears to fall out of the loop.  Though there were desperate attempts to save the franchise, many stores foreclosed.

According to CNBC, Sears first experienced economic decline back in 2005 after merging with Kmart, an already falling franchise. Merging Sears with Kmart solved economic issues for both stores at the time. Unfortunately, Sears profit continued to decline resulting in near bankruptcy. In efforts to save the franchise Chairman Edward Lampert recently bid 4.6 billion dollars to buy retailer Hoffman Estates. By doing this Lampert could potentially save up to 45,000 jobs.

Winning the Bankruptcy Auction 

“The company’s chairman and largest shareholder, Eddie Lampert, won a bankruptcy auction for Sears, averting liquidation of the iconic chain, according to a source familiar with the negotiations,” the Associated Press said in an article.

While this amount of cash will fix some minor issues for the company, the Pension Benefit Guaranty Corp (PBGC), opposed Lampert’s desperate idea to save the franchise. In downfall Sears has accrued 1.7 billion dollars in debt, making Sears an economic crisis and “hail mary”. Critics believe that the likes of this idea are extremely too risky. With the fragile state the franchise is in, and the amount of debt stacked over the years, pension agency deemed Lampert’s plan “no longer possible”. Though PBGC opposes Lampert’s idea, Lampert can pass the idea through bankruptcy court to determine the official outcome of the company.

If the court permits Lampert’s plan, the franchise could experience drastic changes in order to keep the once infamous business alive. Assuming the business can be rekindled, Lampert could potentially return Sears to the once profitable retailer it was. The official court day to determine whether Lampert’s plan is realistic will be held on February 4. There will be a hearing on the retailer, and the final decision on the company.