NEW YORK - Sears Holdings Corp. Chairman Edward Lampert’s ESL Investments Inc., seeking to reassure the retailer’s suppliers, agreed to fund guarantees that vendors would be paid in the event of a bankruptcy.
ESL in January agreed with an undisclosed financial institution to buy a stake in contracts that pay suppliers for their accounts receivable with Sears should the company seek protection from creditors, the Hoffman Estates, Illinois-based retailer said in a filing with the US Securities and Exchange Commission yesterday.
Lampert is seeking to show suppliers that Sears is safe to do business with after the retailer reported its largest quarterly loss in at least nine years last month. Vendors’ confidence in Sears may have been rattled after CIT Group Inc. in January told the retailer’s suppliers it would no longer finance their orders.
Sears last month said it would split off about 1,250 smaller-format stores and sell 11 more locations to raise as much as $770 million. The company had $747 million in cash and near-cash items at the end of the fourth quarter, about 45 percent less than a year earlier. Lampert and his funds control about 62 percent of Sears’s shares.