Seritage Growth Properties — financial distress indicators
Financial-health summary
Seritage Growth Properties's reported numbers place it in the 'Weak' financial-health band (distress score 51/100). The main indicators are operating profit does not cover interest, losses in each of the last 3 years and operations consume cash. Independently, the Ohlson accounting model puts its 1-year failure probability at 33% and the market-implied (Merton) default probability is 0.8%. In its favour: strong current ratio (6.39).
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Interest coverage (EBIT / interest) is -1.32×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Operating cash flow negative in 3 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
Cash covers ~18 months of free-cash-flow burn.
Funding needs within two years make the company dependent on capital-market access.
Price is -62% from its 52-week high.
For financial firms a share-price run often precedes a deposit or funding run (confidence channel).
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Strong current ratio (6.39).
- High insider/promoter ownership (33%) aligns management with survival.
📰 Recent news scan
- Is Now An Opportune Moment To Examine SRG Global Limited (ASX:SRG)? - Simply Wall StreetGoogle News · 2026-10-09
- Seritage Growth Properties stock fell 1.45 percent on October 7 - AD HOC NEWSGoogle News · 2026-10-08
- SRG: Seritage Growth Properties Latest Stock Price, Analysis, News and Trading Ideas - StocktwitsGoogle News · 2026-09-15
- Seritage Growth Properties (SRG) Stock Faces Shrinking Revenue Despite Narrower Losses - Simply Wall StreetGoogle News · 2026-08-16
- Seritage Growth Properties: Good Price For Valley View, But Lengthy Potential Wait For Closing - Seeking AlphaGoogle News · 2026-06-26
- Seritage Growth Properties: No Further Reported Progress In Contracts For Asset Sales - Seeking AlphaGoogle News · 2026-05-20
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Seritage Growth Properties's financial-health indicators show?
As of 2026-10-08, Seritage Growth Properties's public financial data places it in the 'Weak' band with a distress score of 51/100, driven by operating profit does not cover interest, losses in each of the last 3 years and operations consume cash. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Seritage Growth Properties's financial distress score?
51/100 ('Weak'). Ohlson O-score -0.72 (model 1-year failure probability 33%). Merton distance-to-default 2.43 σ (model default probability 0.8%).
What works in Seritage Growth Properties's favour?
Strong current ratio (6.39). High insider/promoter ownership (33%) aligns management with survival.
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
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Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.