July 20, 2001
Sears spinoff HomeLife abruptly closed its stores and filed for Chapter 11 bankruptcy with the U.S. Bankruptcy Court in Wilmington, Delaware, leaving thousands of consumers wondering if they will ever receive refunds for furniture they ordered but which has not been delivered.
The answer, unfortunately, is maybe. Those who paid by credit card should immediately contract their bank and dispute the charge. Those who used Sears cards should notify Sears. Customers who paid by check can stop payment if the check has not yet cleared their bank.
Those who paid cash, or whose checks have already cleared, will have to get in line with all the other creditors and wait for the bankruptcy court to sort it out. As unsecured creditors, consumers often get only a fraction of what is owed to them.
Sears founded HomeLife in the late 1980s. It sold a majority of the chain to Citicorp Venture Capital in 1998. As a minority stockholder, Sears allowed some of the stores to remain inside Sears stores and it provided financinc through Sears credit cards.
The company had sales of about $680 million last year and, with 130 stores in 26 states, was the eighth-largest furniture retailer in the country.
In its bankruptcy filing, the company said it owes more than $100 million to creditors. The closing came after HomeLife failed to raise $85 million in emergency funding.
