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Sears Hometown Stores’ bankruptcy cases converted to Chapter 7
By Sarah Lizee
Olympia, Wash., Feb. 23 – Sears Hometown Stores, Inc.’s Chapter 11 bankruptcy cases were converted to Chapter 7 at the company’s request, according to an order filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.
The company had said in its motion seeking the conversion that the debtors filed the cases with the objective of using the breathing spell afforded by the bankruptcy code to establish an orderly process for the sale of their remaining inventory in a way that would maximize recovery and reduce harm to creditors, dealers and customers.
The debtors had been working with consultants Tiger Capital Group, LLC, B. Riley Retail Solutions, LLC and SB360 Capital Partners, LLC and other professionals, as well as prepetition secured lender PNC Bank, NA to try to liquidate their inventory.
“Unfortunately, notwithstanding these efforts, the results from the inventory sales have been materially less than projected and, as a result, the debtors have exceeded the permitted budget variances under the final cash collateral order,” Sears Hometown said in the motion.
Recently, PNC issued a carve-out trigger notice, terminating the debtors’ ability to access cash collateral effective as of the close of business on Feb. 12.
“Without the ability to use cash collateral or fund the continued administration of their Chapter 11 cases, the debtors have no choice but to cease operations and seek prompt conversion of these cases,” the company said.
“While the debtors are disappointed in this outcome, they nevertheless believe that there is no better alternative and that under these circumstances, conversion of their Chapter 11 cases to cases under Chapter 7 of the bankruptcy code is in the best interests of their estates and creditors.”
The retailer is based in Hoffman Estates, Ill. It filed bankruptcy on Dec. 12 under Chapter 11 case number is 22-11303.
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