What happened

In bankruptcy, Sears Holdings Corp. (NASDAQ:SHLDQ) shares continue to jump up and down just as they did leading up to the Chapter 11 filing. Sears' shares surprisingly rose last week in the sessions after declaring bankruptcy as the stock doubled from Oct. 15 to 17 in a move likely driven by speculators and day traders. However, the stock has been declining since then and fell again today, giving up 12.5% as of 11:54 a.m. EDT.

The exterior of a Sears department store.

Image source: Sears.

So what 

There was little company-specific news out on Sears today, though the stock should remain volatile as bankruptcy negotiations play out. Considering the retailer has to resolve and unwind agreements with landlords, creditors, pensioners, and others, the restructuring process is likely to take months. Sears' chairman and former CEO Eddie Lampert's position as its biggest shareholder and major lender (through his hedge fund ESL Investments) will only complicate the matter as he seeks to extract gain as a "stalking horse" bidder for some assets.

Now what 

Despite the fact that Sears is actually trading up from its closing price the day of the bankruptcy filing on Oct. 15, the stock is almost certain to go to zero eventually. Sears shares will soon be delisted from the Nasdaq exchange, and after that, even if a smaller version of the company survives, management would issue new shares rather than redeem existing shareholders.

Sears has a $11.3 billion in liabilities on its balance sheet against $6.9 billion in assets, and the company sold much of its most valuable real estate to Seritage Growth Properties (NYSE:SRG) before the bankruptcy. The retailer has continued to lose money each quarter, piling up losses since 2010. Common shareholders, who have the last claim to assets in a bankruptcy, are almost certain to get nothing here.

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