Monday, 18 March, 2019

Sears reaches deal to stay in business, for now

A Sears sign is displayed at a store on Oct. 15 2018 in the Brooklyn borough of New York City A Sears sign is displayed at a store on Oct. 15 2018 in the Brooklyn borough of New York City
Laurie Berry | 09 January, 2019, 03:43

Lampert and ESL Investments rank as Sears's biggest shareholder and creditor.

"Sears Holdings Corp will ask a bankruptcy judge on Tuesday if it can proceed with liquidation after it could not reach an agreement on Chairman Edward Lampert's $4.4 billion takeover bid, casting doubt on the survival of the 126-year-old US department store", Reuters exclusively reported Tuesday, citing sources familiar with the matter.

In making his bid for what remains of Sears, former CEO and billionaire investor Lampert stipulated any deal would put him and ESL ahead of other creditors down the line, and would be financed with more debt than cash. According to Reuters' sources, the bid fell short.

But at a NY bankruptcy court, Sears' lawyers told a judge that the company was prepared to consider a revised offer from Sears' chairman Eddie Lampert's ESL hedge fund.

The agreement still needs approval by a judge.

The revised bid is not official, and will be evaluated in an auction set for January 14 that will compete with other bids from liquidators looking to shut it down.

But the deadline passed without any word from Sears on the status of the bid.

Lampert touted his merger of Kmart and Sears as laying the groundwork for their revival, a scenario that did not work out, and had the hedge fund manager relinquishing his role as CEO just after Sears filed for bankruptcy protection last fall.

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Abid Qureshi, an attorney representing a committee of Sears' creditors, said they had not been included in those negotiations and continued to have "significant concerns" about ESL's bid.

A main point of contention in the negotiations between Lampert and Sears previously centered on whether Lampert's bid fully addressed the bankruptcy costs that Sears has racked up, according to sources familiar with the matter.

Sears Holdings Corp shares more than doubled after news emerged that Lampert would have another chance to rescue Sears from liquidation.

Lampert and his hedge fund argue the loans were proper and made to keep Sears alive.

Lampert will be able to use debt he controls as part of his bid, a process known as "credit bidding", Schrock said.

"We would rather look for easier things to do", he said.

A hearing in the case is scheduled for Tuesday.

Unsecured creditors have pushed for Sears to liquidate, partially because they contend they will realize a better financial recovery if it does.

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