Sears warranties could be dissolved in bankruptcy

Here's what will happen to your Sears warranty if the company goes bankrupt
Hayley Peterson 



She said gift cards and rewards points earned through Sears' Shop Your Way loyalty program could also be
erased.
"I would advise customers to redeem their points now," she said.
If Sears filed for bankruptcy protection, the fate of its warranties and rewards points would be decided in court.
Sears would have a lot of creditors to pay — including its suppliers — before customers and their outstanding
warranties and loyalty points would be considered, she said.
Filing for bankruptcy protection allows companies to reorganize by restructuring their debts or selling assets to
try and stay in operation.
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When the sporting goods retailer Sports Authority filed for bankruptcy last year, the company petitioned a judge
to allow it to honor its gift cards and loyalty points throughout the restructuring process.
Eventually, the company went out of business and the value of unused gift cards was lost.

Lopez-Castro believes a similar fate awaits Sears if it files for bankruptcy because the underlying retail business is
ailing.
The company's sales have fallen nearly 40% in the last five years.
"It's not just about de-leveraging their balance sheet," she said. "You have to actually deal with the operations,
which is a much bigger problem."
Sears raised fears about a possible bankruptcy this week after it said in a filing that there's "substantial doubt"
about its ability to stay in business.
The company's chief financial officer, Jason Hollar, later tried to reassure investors in a blog post saying the
company remains focused on meeting its financial obligations.
"We are a viable business that can meet its financial and other obligations for the foreseeable future," he said.