USA TODAY International Edition
Lifeline may not save Sears
Brief extension given to find way to stay open
Sears Holdings, which owns Sears and Kmart, will give its chairman and largest investor Eddie Lampert another day to come up with an offer to keep a shrunken version of the company alive, bankruptcy attorney Ray Schrock told a federal judge Tuesday.
Without a deal, liquidation appears imminent. It could even proceed within weeks.
That would mean the two chains could soon join the graveyard of deceased American re- tailers.
Still, the company’s assets will be auctioned off Monday, Jan. 14. If Lampert hedge fund ESL Investments can’t come up with a $120 million deposit and new deal terms by 4 p.m. Wednesday, liquidators will probably prevail and the company will likely go out of business.
“Our proposal provides substantially more value to stakeholders than would be the case in liquidation and is the only option to save an iconic American retailer and up to 50,000 jobs,” an ESL spokesperson said in an emailed statement. “We believe in Sears and will continue to do everything we can to ensure that it has a profitable future.”
Once known for its iconic catalogs, appliances and department-store variety, Sears fell into disrepair over the last two decades, as stores steadily lost their pep and customers turned to specialty alternatives and digital competition like Amazon.
The company filed for Chapter 11 bankruptcy protection in October, hoping to use the debt-cutting process to rid itself of burdensome leases, financial liabilities and costs. That process has already involved hundreds of store closings for a company that once had more than 3,000 locations.
But even impressive financial engineering wouldn’t give customers an immediate reason to begin shopping at Sears or its discount-store sibling Kmart, whose blue-light specials once lured customers looking to save a buck. The retailer last month received an acquisition offer from chairman and former CEO Lampert’s ESL, that would keep about 425 stores open and 50,000 employees working.
But that deal includes a mix of financing that Sears advisers have rejected as insufficient. It also included a controversial measure that would release ESL from liability for past deals that may have enriched the hedge fund at the expense of other Sears creditors.
Schrock said negotiators have been working around the clock to try to get a new offer from Lampert that would qualify for the bankruptcy auction for Sears assets. Lampert now has until 4 p.m. Wednesday to deliver a new offer along with a deposit of about $120 million, including about $18 million that’s nonrefundable.
It’s “some good news for Sears,” Schrock told Judge Robert Drain.
Sears and ESL have declined multiple requests for comment since the retailer missed a Friday deadline.