Sears sought Chapter 11 protection from bankruptcy. Here's what you need to know.

After years of losses, Sears Holdings Corp., based in Hoffman Estates, filed Monday early in the Chapter 11 bankruptcy proceedings.

Here's what it means and what it could mean for the parent company of Sears and Kmart, which has not made any annual profit since 2010.

What is Chapter 11 bankruptcy protection?

Under the federal bankruptcy code, Chapter 11 qualifies as a reorganization because it allows companies like Sears to continue their operations by developing a plan for restructuring, debt reduction and creditors' repayment.

How did we come here?

Sears, like many other traditional department stores, has struggled in recent decades, with consumers now moving from shopping malls to big box stores, specialty chains and, more recently, merchants. online like Amazon. Kmart had already reorganized Chapter 11 when it merged with Sears in 2005. Despite repeated calls from President Edward Lampert to turn the merged company into a smaller, member-focused retailer, Sears Holdings has lost $ 11 billion since 2011 and off real estate and press loans from Lampert's hedge fund ESL Investments to stay afloat.

Do more shops close?

Yes. Shortly after filing the complaint, Sears announced plans to close 142 unprofitable stores by the end of the year, in addition to the 46 stores already identified. He did not specify whether the closures would be Sears or Kmart stores or their locations.

There are still 12 Sears department stores and eight Kmarts operating in Illinois. Sears has closed hundreds of stores in recent years.

Will employees be paid?

Sears stated that it would continue to pay employees 'salaries and benefits, honor members' programs and pay vendors and suppliers for all goods and services provided from the date of filing. bankruptcy.

What about Sears retirees?

The company's long-term retirement obligations, which have been underfunded by more than $ 1 billion for years, are protected by the federal Pension Benefit Guaranty Corp., which paid the bill for nearly 5,000 employer pension plans failing since its inception in 1974. A potential loss of a life insurance plan that the PBGC does not cover is another source of concern for many retirees from Sears.

What happens if the reorganization does not work?

Sears could convert its case of bankruptcy into liquidation under Chapter 7, which would involve the sale of its assets and the distribution of this product to certain creditors. However, it could also wind up its assets without officially going to Chapter 7. Earlier this year, Bon-Ton Stores, Carson's parent company, had filed for Chapter 11 protection in bankruptcy, but had finally Liquidation and closed all stores after not having found an investor or buyer keep the chain afloat. Toys "R" Us also attempted to reorganize into bankruptcy. He also closed all his stores earlier this year.

MORE COVERAGE

The rise and fall of Chicago: 130 years of Sears

According to a developer, the huge Hoffman Estates project goes from the front, with or without Sears in town

84 years of Sears Christmas catalogs: discover what's inside