Sears won’t close as chairman fends off creditors
Bankrupt retailer reaches deal that will keep 425 stores open
Sears lives. For now.
The bankrupt retailer and Edward S. Lampert have reached a $5.3 billion deal that would keep its 425 stores open and its 50,000 employees at work, according to a person familiar with the situation.
In the deal, reached in the early morning hours Wednesday, Lampert would acquire most of Sears’ assets, the person said. The final details of the sale still needed to be arranged, and negotiations were expected to continue through the day and could still fall apart.
Lampert, a hedge fund manager and Sears’ chairman, was the only bidder at a closed-door auction this week who sought to keep the company operating as a “going concern.” All of the competing bidders planned to liquidate the company’s
real estate, inventory and brands.
A federal bankruptcy judge must still approve Lampert’s bid at a hearing this month, giving the company’s creditors a chance to derail the deal. At a hearing last week, the bankruptcy judge, Robert D. Drain, said Lampert’s bid was “a good development” because
it offered Sears a shot at survival.
If the deal was approved, Sears would emerge from bankruptcy with less debt but would still face steep odds in winning back shoppers. Lampert is deepening his investment in Sears at a time of great uncertainty for old-line retailers. While overall consumer spending has been solid, some retailers like Macy’s and J.C. Penney, reported weak holiday sales, signaling that their turnaround plans are floundering as Americans change the way they shop.
Founded shortly after the Civil War, Sears was once the nation’s largest retailer. But it has been in a precipitous decline for years, losing ground to Amazon and Walmart as consumers moved their spending online and mall-based chains suffered.
The company filed for bankruptcy in October, as its sales stalled and its debt payments mounted.
Lampert, who took control of Sears in 2005 when it merged with Kmart, was the company’s largest shareholder and lender through his hedge fund, ESL Investments.
Some creditors have criticized Lampert for making deals, including selling the Lands’ End brand, that have benefited his hedge fund while harming Sears in the long run.
Lampert has countered that his investments in Sears have hurt him financially.