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Chairman Eddie Lampert wants to keep Sears Holdings Corp. alive, but a group of the company’s creditors say they’d be better off if Sears were dead, Bloomberg News reported. The plan envisioned by Lampert amounts to “an unjustified and foolhardy gamble with other people’s money,” the unsecured creditors committee said in court papers on Friday. Staying in operation long enough to allow a sale would burn through as much as half a billion dollars, which should instead go to creditors, the group said. Sears filed for bankruptcy protection Oct. 15 after years of decline, and on Nov. 2 proposed auctioning off its highest-performing stores. That could open the way for Lampert, Sears’s largest shareholder and creditor, to hold on to the best parts of the retail empire without spending a dime by making a so-called credit bid — trading the debt he holds for ownership. But Sears can’t be saved, the unsecured creditors group said. The company’s plan “appears to be nothing more than wishful thinking,” it said, leaving the group “no choice” but to request the bankruptcy court deny the request to pursue the store sale. Sears is next expected in court Nov. 15, when it will formally present its plan to keep the lights on through the holiday season. The company is also looking to auction about $900 million of notes that are essentially loans from one Sears unit to another, and it will seek court approval of that plan at Thursday’s hearing. A hearing on a separate motion regarding the company’s quest to obtain a new loan from a third-party investor was originally scheduled for the same Nov. 15 date, but has been postponed to Nov. 27.

The 138-year-old James Candy Co. has filed for chapter 11 bankruptcy protection for the first time in its history, citing this summer's rainy weather as the final factor after more than a decade of declining Boardwalk visitors and sales, the Press of Atlantic City reported. "When you have the weather patterns we had this summer — our business was just very affected," said Chief Operating Officer Lisa Glaser Whiteley. "And the cost of doing business doesn't change, except to go up." The spring and summer were both rainy this year, she said, resulting in a sales decline of 11 percent from January to September. That followed a 12 percent sales decline in 2017, she said, for a total of 23 percent in less than two years. James Candy Co. is owned by the Glaser family. It has 11 retail outlets in the mid-Atlantic region, including New Jersey locations in Atlantic City, Ocean City, Wildwood and Cape May, and has a national wholesale and direct mail-order business. Its brands are James Confections, Fralinger's Salt Water Taffy and Bayard's Chocolate Stores.

Sears Holdings Corp. is considering whether to auction off a chunk of debt that could give the bankrupt estate an infusion of cash while potentially allowing a bigger payout to hedge funds that bought insurance against its default, Bloomberg reported. Sears may sell as much as $900 million of notes that are essentially intercompany loans from one subsidiary to another, according to people with knowledge of the matter, who asked not to be identified because the discussions are private. Normally, the retailer might find few takers for such unsecured debt. But to hedge funds and other investors that bought roughly $400 million of side wagers known as credit-default swaps, the notes could significantly boost the amount they are owed on those trades. Sears has been trying to line up fresh cash as it seeks to keep its doors open and reorganize in bankruptcy. When it filed for chapter 11 protection last month, the retailer said only lined up part of the funding it needed to stay in business.

With its latest batch of store closures, Sears appears to be making good on its goal to emerge from bankruptcy a vastly smaller company, USA Today reported. The iconic retailer, which filed for chapter 11 bankruptcy protection last month, said yesterday that it will shutter another 40 Sears and Kmart stores in February, on top of the 142 locations it previously announced would be closing by the end of this year. Attorneys for Sears told the U.S. Bankruptcy Court at an initial hearing that the retailer wanted to make a decision about the financial prospects of another group of struggling stores by Nov. 15. The retailer has also said that it is critical the bankruptcy process move swiftly. It has proposed having its chapter 11 reorganization plan filed by late December and confirmed in March 2019.

Tops Markets LLC supermarket chain is preparing to leave bankruptcy protection after cutting costs and resolving several battles with labor unions, WSJ Pro Bankruptcy reported. Tops Markets yesterday received approval to execute the final phase of the company’s debt-cutting plan from Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., who called the plan “remarkably consensual.” The clearance will enable the Williamsville, N.Y.-based grocery store chain, which filed for bankruptcy with roughly 170 supermarkets in New York, Pennsylvania and Vermont in February, to emerge from chapter 11 protection. Before the filing, Tops Markets struggled with competition, payments due on borrowing deals that were made by previous owners and a record run in falling food prices last year that hurt supermarket chains across the U.S., company officials said in earlier court papers. Amid the trouble, the chain lost about $80 million on about $2.5 billion in revenue last year. Tops Markets used the chapter 11 process to renegotiate the terms of the company’s loans. Under a new borrowing agreement, the company will save $36 million a year and get access to $35 million once it emerges from bankruptcy.

When Sears Holdings Corp. collapsed into bankruptcy last month, bearish credit-derivatives traders thought they had a winning bet. Now their trades are threatening to go awry, the latest instance of discord between participants in the multitrillion-dollar credit protection market, WSJ Pro Bankruptcy reported. Away from the retailer’s court-supervised bankruptcy, tensions are developing between hedge funds on opposite sides of insurance contracts tied to bankrupt subsidiary Sears Roebuck Acceptance Corp. (SRAC). Insurance buyers are struggling to come up with enough eligible SRAC securities to deliver into the auction. The scarcity of eligible SRAC debt means that credit default swap holders including Och-Ziff Capital Management Group LLC could recover fewer insurance dollars than they otherwise might. Now some insurance holders are seeking to have additional SRAC debt obligations declared eligible in order to juice returns in the auction. So far, the International Swaps and Derivatives Association’s Determinations Committee has approved less than $300 million in eligible SRAC debt obligations, compared with more than $400 million in net outstanding credit derivatives.

A group of creditors alleged that Sears Holdings chairman and investor Eddie Lampert may have profited from the company's plunge into bankruptcy, USA Today reported. A committee organized to represent the retailer's unsecured creditors in court accused Lampert and his hedge fund ESL Investments of potentially structuring deals to gain an unfair edge as the company declined. They "may have exercised undue influence to siphon value away from the Company on favorable terms," the creditors group said in a court filing. The group also said that Lampert may have leveraged his "insider status to obtain an ever-increasing percentage" of Sears debt, allowing him to "obtain beneficial positions" in the retailer's chapter 11 bankruptcy.

Taco Bueno filed for chapter 11 protection yesterday after reaching a deal that will ultimately cede ownership of the chain to a big, Dallas-based multiconcept franchisee, Sun Holdings, Restaurant Business reported. Sun Holdings, which operates more than 800 locations for a number of brands such as Burger King, Arby’s and Popeyes, will become the owner of the chain in a debt-for-equity swap. Sun, which recently acquired Taco Bueno’s bank debt, has agreed to invest in remodeling Taco Bueno locations, “increasing brand initiatives and enhancing the customer experience.” Sun Holdings will provide up to $10 million in financing for Taco Bueno to get through bankruptcy. It will then swap the debt it holds on the chain for equity in the company and will become its owner. Taco Bueno filed for bankruptcy in the U.S. Bankruptcy Court in the Northern District of Texas, claiming between $10 million and $50 million in assets and between $100 million and $500 million in liabilities.

David’s Bridal Inc. is making preparations for a bankruptcy filing if the retailer can’t reach an out-of-court deal with its creditors, Bloomberg reported. The goal is to ease the chain’s debt load of about $760 million with a pre-negotiated restructuring plan either in or out of court. Either way, David’s has no plans for major store closures or liquidations, and the business would keep operating regardless of a court filing. The wedding-gown merchant has until Nov. 14 to make an interest payment that it skipped last month after initial negotiations with three creditor groups stalled. Active discussions with debt holders are still underway and the situation remains fluid. David’s and three creditor groups have gone back and forth with out-of-court restructuring proposals for weeks. Early discussions contemplated a rights offering backed by existing noteholders including Solace Capital Partners and Oaktree Capital Group, a majority bond and loan holder. Those talks broke down after the financing from the funds did not materialize and creditors failed to agree on the pricing and terms of the proposed new debt structure.