Albert Barrera of Odessa, Texas, walked into a Sears store recently with a pressing question for the manager: "If Sears closes, who will service my refrigerator?"
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Here's what will happen to your Sears warranty if the company goes bankrupt (SHLD)
Speculation is swirling that Sears could soon go bankrupt, leading many customers to wonder: what will happen to my warranty?
Warranties might not be honored in the event of a Sears bankruptcy.
Barrera had bought a Kenmore refrigerator for $529 several months earlier, and along with it, he purchased a three-year service warranty that cost $229 — almost half as much as the refrigerator.
Now he's worried that Sears could go out of business and that his warranty will be canceled as a result. He says the store manager failed to alleviate his fears.
Barrera is in the same boat as countless other customers.
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Sears has long been a top seller of home appliances in the US, and with those appliances, the retailer has sold countless warranties.
But within the last decade, Sears' sales have plunged and now speculation is growing that the company could go bankrupt.
That has left many customers like Barrera wondering: what will happen to my Sears warranty?
According to bankruptcy lawyer , there's a possibility warranties would be dissolved in the event of a Sears bankruptcy.
real risk that they will not be honored."
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"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.
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.
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"It's not just about deleveraging 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 "substantial doubt" about its ability to stay in business
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