USA TODAY International Edition
Sears boss defends plan
Proposed sale to ex-CEO may beat liquidation
WHITE PLAINS, N.Y. – The chief restructuring officer in charge of the Sears bankruptcy said Wednesday that the company’s proposed sale to its controversial chairman and ex-CEO would be a better deal for creditors, workers and vendors than liquidation.
Mohsin Meghji, who was appointed as the Sears restructuring chief when Chairman Eddie Lampert resigned as CEO in October, defended the retailer’s plan to sell itself in shrunken form to Lampert’s ESL Investments.
Meghji testified in bankruptcy court on the second day of a hearing to decide the retailer’s fate that he had analyzed the difference between a deal to sell Sears to ESL and an alternative move to liquidate the company.
“Under which scenario did you conclude the creditors did better?” Sears bankruptcy attorney David Lender asked Meghji.
“ESL,” Meghji testified.
A committee of unsecured creditors that is seeking the liquidation of Sears disagreed with Meghji’s conclusion, questioning ESL’s intentions and the structuring of the deal, saying it appeared to primarily benefit Lampert.
Judge Robert Drain, who is presiding over the hearing, will rule after its conclusion on whether Sears can be sold. If he agrees, the deal could be finalized Friday. If he rejects the deal, Sears is likely to liquidate.
The creditors have accused Lampert and ESL of orchestrating a “scheme” over years to “steal” Sears assets. Lampert and ESL have defended their role, saying they devoted billions in loans to Sears and helped preserve jobs.
Following Meghji’s testimony, a back-and-forth ensued between Joseph Sorkin, representing the creditors, and Meghji about a dispute between Sears and ESL over one key element of their term.
Sears revealed Monday that it believed the sale terms required ESL to assume up to $166 million of accounts payable for items received after the bankruptcy filing.
“We don’t know if they’ve agreed,”
Sorkin said of ESL.
ESL said Monday it is committed to getting the deal done but did not address the accounts payable issue.
ESL agreed last month in a last-minute bankruptcy deal to a deal its advisers valued at more than $5.2 billion to acquire Sears and keep about 425 stores open and 45,000 employees working.
In further questioning, Sorkin appeared to suggest that Sears leadership was doing the bidding of Lampert by recommending in a letter to the business’ restructuring committee that it approve the sale to ESL without evaluating whether its plan could work.
But Sears Chief Financial Officer Robert Riecker said that “he did not request us to write a letter” and “did not require us” to do so.