By Bob Uphues
A year ago, Sears consolidated its sprawling 180,000-square-foot store at the North Riverside Park Mall into half that space as part of the company's strategy to streamline its operations and move toward profitability.
Now, the future of that store and the 126-year-old company itself is in doubt after parent company Sears Holdings Corporation filed for Chapter 11 bankruptcy protection on Oct. 15 in U.S. Bankruptcy Court in the Southern District of New York.
The good news for North Riverside is that the 90,000-square-foot Sears store and its adjacent auto center at the North Riverside Park Mall, 7501 Cermak Road, were not among the 142 Sears and Kmart stores identified for closure in the bankruptcy filing.
Sears and its auto center at North Riverside will continue to operate as normal for the foreseeable future.
"Our Sears manager is telling me their business, since they've downsized, has been above their plan," said Harvey Ahitow, general manager of North Riverside Park Mall. "It's always been one of their better stores in Chicagoland. Ours is not an underperforming store."
Seritage Growth Properties, the company created in 2015 to buy up real estate assets and repackage them for lease to both Sears stores and other businesses, owns the two-story anchor space at the north end of North Riverside Park Mall.
In addition to consolidating the Sears retail store into the top floor of the anchor space, Seritage has now leased out half of the lower level to Round One, a family entertainment complex featuring bowling, billiards, arcade games, karaoke and more.
"We've always felt this pending announcement was going to happen," Ahitow said of the Sears bankruptcy filing. "The risk, obviously, at some point is they have to start making money with the stores they continue to operate. For the immediate future we view this as a positive, because it gets them closer to where they need to be."
Three Illinois stores are among the initial closures, including two in the Chicago area -- the Sears at the Louis Joliet Mall in Joliet and the Kmart at the Harlem Irving Plaza in Norridge.
Those stores will begin liquidation sales "shortly," according to a press release issued by Sears Holdings announcing the bankruptcy filing. The closures listed in the bankruptcy filing are in addition to closure of 42 Sears and Kmart that the company announced back in August.
By filing for Chapter 11 bankruptcy protection, Sears officials hope that the company can survive the process as a smaller, but going concern. As late as last week, there were fears the company would have to file Chapter 7 bankruptcy, which would have resulted in total liquidation of the company's assets.
"Over the last several years, we have worked hard to transform our business and unlock the value of our assets," said Edward S. Lampert, Sears Holdings' chairman of the board in a press release. "While we have made progress, the plan has yet to deliver the results we have desired, and addressing the company's immediate liquidity needs has impacted our efforts to become a profitable and more competitive retailer."
A press release announcing the bankruptcy filing also states that Lampert has stepped down as Sears Holdings CEO, though he remains chairman of the board.
Day-to-day operations of the company will be handled by a newly created, three-person Office of the CEO.
Sears Holdings has also announced it has received commitments for $300 million in debtor-in-possession financing from its lenders and is negotiating a $300 million financing agreement with ESL Investments Inc., a hedge fund that is Sears Holdings' largest stockholder and creditor. Lampert is chairman and CEO of ESL Investments.