"The Company and certain of its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of NY", a statement by Sears Holdings Corporation said. That is in addition to the 46 stores planned to close already.
Lampert had pledged to restore Sears to its glory days, when it owned the tallest building in the world and companies that included a radio station and Allstate insurance.
But despite efforts to revive it, the company has not turned a profit since 2011.
The company listed $6.9bn in assets and $11.3bn in liabilities in documents filed in the US Bankruptcy Court in the Southern District of NY.
Sears said its cash crunch had accelerated because concerned vendors required payment sooner. Next Monday, it is due to pay back a $134 million debt to its lenders. Lampert gave up his title of chief executive officer as part of the filing.
Keeping shelves full and sales stable could become a determining factor in avoiding liquidation and helping creditors determine whether they want to keep throwing money into the company.
Sears said it has received a $300m financing package to fund its operations during the bankruptcy proceedings and was negotiating an additional $300m. The bankruptcy court must greenlight this financing.
The beleaguered 125-year-old retailer, once the largest in the United States, hopes to sell stores and other assets, including its Kenmore appliances brand and home services business, in court-supervised auctions while under bankruptcy protection, the sources said.
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In a March 2017 government filing, Sears said there was "substantial doubt" that it would be able to keep its doors open - but insisted its turnaround efforts would mitigate that risk. He said the bankruptcy process would allow the company to shed debt and costs and "become a profitable and more competitive retailer".
"As we look toward the holiday season, Sears and Kmart stores remain open for business and our dedicated associates look forward to serving our members and customers", Lampert said Monday.
Sears has been closing stores and selling properties as it grapples with a debt load of more than $5bn. In its heyday, it was both the Walmart and Amazon of its time. Decades earlier, it had been dethroned by Walmart Inc.as the biggest.
Sears' stock has fallen from about 6 USA dollars over the past year to below the minimum 1 U.S. dollar level that Nasdaq stocks are required to trade in order to remain on the stock index. Lampert has slashed costs, cut stores and lost millions trying to turn the company around.
She said a refrigerator her mother bought at Sears broke after two years and it still hasnt been fixed for nearly a month with no help from the retailer.
Being an unsecured creditor of Sears (SHLD) right now is not a good place to be.
"When you go into a bankruptcy, you're living in a fish bowl and every transaction will be looked at and examined", said Corali Lopez-Castro, Managing Partner at law firm Kozyak Tropin & Throckmorton.
Sears tools gained a great reputation among craftsmen like Vesei who saw them as being dependable.