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Sears Chapter 11 Expected; $10B in CMBS at Risk
With Sears Holdings announcing that it had added a restructuring expert to its board, and published reports that it had brought in M-III Partners to prepare for a possible bankruptcy filing, expectations rose that the retailer would enter Chapter 11 protection as soon as this week. A group of its lenders reportedly are pushing for Chapter 7 liquidation.
In the latest wrinkle, Reuters reported Thursday that Sears CEO Eddie Lampert was exploring a bid for some of the Hoffman Estates, IL-based company’s businesses and real estate once it files for bankruptcy, an alternative to a traditional court-supervised reorganization.
Crain’s Chicago Business reported that given the gradual rise of e-commerce, a fair number of Sears locations have closed and have already been redeveloped.
However, enough remain open that a Sears bankruptcy would impact more than $10 billion in CMBS loans that are partly collaterized by Sears- or Kmart-branded locations, according to Trepp.
By state, California is home to the largest chunk of retail debt—$1.047 billion—that counts Sears Holdings as a top five tenant. New York isn’t far behind with about $1.013 billion. There’s also more than $850 million in Sears-backed CMBS loans that encompass multiple states.
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