Sears' creditors are demanding that the company shut down all its remaining stores.
The retailer's plan to survive bankruptcy is "nothing more than wishful thinking" and "an unjustified and foolhardy gamble with other people's money," a group of unsecured creditors has declared in a new filing.
Sears has proposed cutting its store count to roughly 400 profitable stores, then selling the associated real estate to raise cash while the company works to return to profitability. The company had 687 stores when it filed for Chapter 11 bankruptcy in mid-October.
Read more: Sears is closing another 40 stores — here's the complete list of locations
Creditors seem to believe that Sears has little chance of achieving profitability even with only its most successful stores, saying this is a "feat [Sears] could not accomplish in the six years leading up to the commencement of their" bankruptcy filing.
Unsecured creditors have the most to lose in bankruptcy cases. The debt they have extended to debtors — in this case, Sears — is not secured by any real estate or other assets. So they are the least protected in the event of a liquidation.
The costs associated with continuing to keep Sears' stores open would drain some of the remaining funds owed to these creditors, they said.
Assuming Sears sells the remaining stores within three months, the company could burn through about $375 million, the filing reads.
"By contrast, pursuing [going-out-of-business] sales for all of [Sears'] stores during the same time period may maximize the value of [Sears'] estates," it continues.
A representative for Sears declined to comment.
