Sears has been a staple in Hawaii for decades, but that could all change. It filed for Chapter 11 bankruptcy Monday and will close an additional 140 stores nationwide.
While the remaining locations in Hawaii will stay open, residents and local businesses could still be impacted. Chapter 11 bankruptcy means the company is reorganizing its finances to pay its bills. They are not liquidating, so Sears will continue to keep its profitable locations open.
However, state officials are warning residents to be careful any time a company is going bankrupt. Many may still have gift cards or warranties under Sears, so here’s what you need to know:
“My understanding is that Sears has said they will honor all current warranties and if some item is in need of repair, consumers should go forward with the normal course of business,” said Executive Director Stephen Levins of the Department of Commerce and Consumer Affairs.
Levins also said to use those gift cards immediately because you never know what’s going to happen in bankruptcy court. From this point forward, if you’re going to shop at Sears, it’s better to use your credit card.
“Many credit card companies have protection plans in place. For instance, a company is unable to perform, a company does not deliver the product on time, or fails to deliver at all…almost every company has a provision in place in which they will seek to compensate the consumer if there was a failure to deliver a failure to provide services,” he said.
There are a number of local businesses that supply merchandise to Sears and will be impacted, including footwear company Scott Hawaii.
“It’s the uncertainty that obviously is a factor,” said CEO Steve Scott.
Scott tells us, for now, he’s comfortable supplying his merchandise to Sears at least through Christmas.
“The information we received from Sears is that they have $300-million in financing which is debtor in possession financing and that’s to actually pay for anything going forward. So if we ship this coming week that would be covered under the debtor in possession financing,” said Scott. “As far as our business, I think you just have to stay current and to update. You have to remain competitive.”