Cyrus, Sears head ready takeover bid

Cyrus Capital Partners and a hedge fund run by Sears Holdings Corp. Chairman Eddie Lampert are preparing a potential joint takeover bid that would keep the bankrupt chain alive, according to people with knowledge of the matter.

The prospective suitors may offer to swap debt that they hold for ownership of the stores in a so-called credit bid, said the people, who asked not to be identified because the process isn’t public.

Representatives for Lampert’s ESL Investments Inc. hedge fund and Cyrus declined to comment. A representative for Sears, based in Hoffman Estates, Illinois, also declined to comment. A takeover would require approval from the bankruptcy court, and competing bids from other suitors are still possible, including one that would liquidate the company.

Lampert has said he was considering making an offer to keep Sears open for business. But the retailer has struggled to obtain financing just to stay open during its bankruptcy proceedings, and said this week it will need an additional $239 million by February.

Just days earlier, Cyrus and Sears found themselves at odds over the company’s plan to raise cash by selling notes to debt traders — a move that would devalue a side bet Cyrus had made on the bankrupt retailer’s survival. Cyrus ultimately wound up buying those notes itself, and in a last-minute courthouse hallway deal Tuesday, it stepped in to provide key bankruptcy financing the retailer needs to keep operating.