MATTERS OF INTEREST

Firm Represents Client in Sears Bankruptcy Proceeding

As reported in the news nationwide in October, the once-dominant Sears department stores and its many subsidiaries filed a petition for Chapter 11 bankruptcy in the Southern District of New York. The litigation has been very active to date, often with dozens of filings in a single day. The Firm is representing a party in the bankruptcy as a claimant. Firm Partner Robert Abiuso and Associate Matthew McCann have been engaged in the case and taken necessary actions to represent the client’s interests.

Not surprisingly, in an initial filing with the Court, Sears explained that it “enter[ed] these Chapter 11 cases in dire financial straits.” In the interim since the filing of the Chapter 11 petition, the Bankruptcy Court has granted Sears’ request for interim funding to pay creditor vendors in order to keep the flow of inventory and some stores open. In Sears’ motion to the Court, it indicated that “[t]he relief sought in this Motion is critical for the Debtors to pay their ordinary course operating expenses, to finance the Chapter 11 cases and, ultimately, to provide Sears an opportunity to survive and reorganize.” Sears sought this relief immediately, and kept the fact that it would be filing for bankruptcy confidential as long as possible, to minimize the “risk of liquidity further tightening due to immediate vendor contraction and ‘stop-ship’ actions[.]” Sears has circulated the message that the financing approved by the Court will allow it to continue to pay vendors during the course of the bankruptcy, though it is anticipated that Sears will again soon seek similar funding, in addition to the initial $300 million, in order to continue to be able to pay vendors and stock the stores, which it can continue to operate.

The first Meeting of Creditors will be held at the Office of the United States Trustee in Manhattan. Both Robert Abiuso and Matthew McCann will continue to be involved as the bankruptcy proceeds.

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