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Sears

A report in the Wall Street Journal on Thursday said Sears could be forced to liquidate the company, which would require the closing of its stores, including the one at Gateway Mall in Lincoln.

Sears may soon join the list of retailers headed to the scrap heap.

The Wall Street Journal reported Thursday that some of the company’s lenders are pushing for the retailer to file Chapter 7 bankruptcy rather than Chapter 11.

A Chapter 7 bankruptcy would require the business to be liquidated, stores closed and all its assets sold to pay off as many debts as possible.

Bankruptcy has been widely speculated as the only likely option for the beleaguered retailer, which has a debt payment of $134 million due Monday and is unlikely to be able to make it unless it can find a lender willing to provide more money.

Reuters also reported Thursday that some vendors have reported that Sears has stopped paying them for merchandise.

According to the Wall Street Journal, Sears has proposed restructuring either outside of court or by filing Chapter 11 bankruptcy to allow it to reorganize, close more stores and shrink to a size at which it thinks it can be profitable.

However, the company, which owns both Sears and Kmart, has not turned a profit since 2010, despite closing thousands of locations during that time. The newspaper said the group of creditors, which includes many of the country’s largest banks, believe they have a better chance of recouping their money through liquidation of the company.

That could mean the end of Sears, which got its start more than 130 years ago as a catalog retailer.

"The prognosis is gloomy, just as it has been for many years," Neil Saunders, managing director of GlobalData Retail, told The Associated Press.

Word that lenders are pushing for liquidation, Saunders said, is a sign that Sears is a company with no inherent value and is "broken operationally as well as financially."

"At some point, the music has to stop," Saunders told The AP. "We believe that time is now."

Nebraska has largely dodged the Sears store closings. The company did close its location at Oak View Mall in Omaha last month, but it still has a location at Crossroads Mall in Omaha, as well as one in Grand Island and the Lincoln store at Gateway Mall. There also are smaller-format Sears Hometown stores in several Nebraska cities.

According to the Kmart website, there is only one of those stores left in Nebraska, in Alliance.

Closing of the Gateway Sears store would mean the loss of a second anchor tenant at the mall, after the closing of Younkers in August. Unlike the Younkers space, which the mall owns, Sears owns its building at Gateway, and it's unclear what would happen to it if the company is forced to liquidate.

Gateway officials declined to comment specifically on Sears, but General Manager Chad Becwar said in an email that whenever a space opens at the mall, "we consider ways to add mixed-use ideas to the property."

Closures of Younkers and Toys 'R' Us already have played a role in boosting the local retail vacancy rate to its highest level in two years, according to NAI FMA Realty's 1st Half 2018 Lincoln Market Report.

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Reach the writer at 402-473-2647 or molberding@journalstar.com.

On Twitter @LincolnBizBuzz.

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