Sears Hometown Files for Chapter 11, Citing Lack of Inventory and Heavy Liabilities

Sears Hometown Stores, an offshoot of the original department store, has filed for Chapter 11 bankruptcy in Delaware. The company has less than $50 million in assets but between $50 million and $100 million in liabilities, according to court documents.

The “original” Sears reached a $175 million settlement with former CEO Eddie Lampert in August 2022 to clear the way for a long-delayed bankruptcy plan. The litigation had been ongoing since 2019, when Sears accused Lampert and others of “asset stripping and ‘rank’ self-dealing.” By that point many of the old Sears assets, including Sears Hometown and the remaining Sears and Kmart outlets, had been sold to the Lampert-controlled Transformco for $5.2 billion.

Sears Hometown itself was spun off from the main company in 2012. The average Sears Hometown store is 8,000 to 10,000 square feet, compared to 160,000 square feet for a traditional Sears store. It put an emphasis on selling home goods such as appliances and tools, but with the Craftsman brand having been sold to competitors there was little to differentiate itself from the competition.

Sears Hometown owes an estimated $3 million to Transformco, according to court documents. The two companies have been in dispute, with Sears Hometown claiming that a “lack of inventory” has accelerated its spiral toward Chapter 11, compounded by overall declining sales and the lingering impact of COVID-19. The company also reached out to potential buyers in January 2022, according to court documents.


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