Sears Holdings Corp. (NASDAQ: SHLD), owner of Kmart and Sears, has seen its shares drop 88% in the past year to $5.64. That is due to huge losses, falling same-store sales and rising debt, some of it owed to controlling shareholder Eddie Lampert. In a retail market in which Sears and its direct competition are virtually being driven out of business, it is a puzzle why Lampert keeps the business open. He will never get his money back.

Bloomberg reports that Sears has eaten through its most recent $200 million debt lifeline. The money was, of course, from Lampert. Perhaps because it is secured by Sears assets, he will get the money back when he eventually holds those assets. Based on revenue that the assets yield, their financial value will not be based on earnings.

Lampert’s play may be to leverage his loans into asset control in a bankruptcy. However, Sears has already sold off a number of its brands and some of its real estate. Lampert likely cannot get back the value of his loans in terms of what is left of Sears, although that might be his gamble. In the meantime, common shareholders would be wiped out.

It is a wonder Lampert continues to loan Sears money and will have to continue to into the future. The holiday season will be a disappointment. Sears has suffered too much erosion of it brand. Same-store sales will not reverse themselves from quarter after quarter of fall-off. Sears’s e-commerce business cannot possibly compete with an online sector controlled by Amazon.com.

Lampert has an unknown reason to keep Sears going. It is not easy for outsiders to guess it. Why buoy a company that has no chance of floating when a bankruptcy would be a clear way out of the mess, and one that could be an advantage to him?

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