Sears Bankruptcy Update: Creditors Will Get Their Money, Just Not All Of It

Sears Holdings Corp.’s (SHLDQ) creditors may have to wait a little longer to get paid as the company has received approval for a Chapter 11 liquidation plan that will put off paying them for a while.

Sears, which filed for bankruptcy in October 2018, will give its creditors the option to take a discounted payoff of the money owed, or wait until it completes its liquidation to get paid, Market Watch reported.

Sears reportedly owes tens of millions of dollars to its supplier that helped to keep merchandise on its shelves while it struggled to maintain its operations. The company, which currently doesn’t have enough money to cover its creditors’ payments, will pay 2.5 cents on the dollar for the money owed as part of the discounted payoff, the news outlet reported.

Through the creditor repayment plan, the suppliers have the ability to get at least a portion of the money they are owed now, which David Wander, an attorney for the creditors from the law firm of Davidoff Hutcher & Citron LLP, said was good news for the vendors as it is the “beginning of the end” for the year-long bankruptcy case.

Sears is expected to begin paying its creditors as it starts to receive payments from its bankruptcy estate, which are estimated to total about $50 million. The company is said to have about $46 million on hand, according to testimony presented in the case (via Market Watch).

Shares of Sears Holdings stock were down 1.68 percent as of 3:46 p.m. ET on Wednesday.