Sears to stay in business thanks to bid from former CEO

Gladys Abbott
January 9, 2019

The offer from Lambert is $4.4 billion, however it does not complete the sale.

Sears Holdings Corp agreed on Tuesday to consider a revised takeover bid from Chairman Edward Lampert, temporarily staving off a liquidation that would have spelled the end of the 126-year-old US department store operator. The deal would keep 425 of the stores open. According to lawyers close to the matter, one of the main sticking points was that the $4.4 billion bid, which included $1.3 billion in financing from three financial institutions, didn't include cash.

Judge Robert Drain still needs to approve the agreement, but called the deal "a good development".

By deeming Lampert's revised bid acceptable, Sears started the clock on an auction period that ends on January 14.

Image: Sears has been steadily shutting stores, earmarking 262 shops for closure by February this year.

Sears filed for Chapter 11 bankruptcy in October.

The deal was reached after days of "virtually round-the-clock negotiations", Sears attorney Ray Schrock told the court.

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Troubled US retail giant Sears is considering a revised takeover bid from its chairman's hedge fund after being left on the brink of liquidation.

Reuters reports the negotiations between Lampert and the company broke down over the structure of his bid, as well as the former CEO's request to not be held liable for actions he took while servicing as the company's chief executive.

The costs, which include bills from lawyers and financial advisers, are expected to exceed US$200 million, those sources said.

But the fact that Sears has an offer that seeks to rescue it doesn't guarantee it will escape liquidation.

In general, bankruptcy courts would rather not liquidate a company if there's a chance to keep it alive and its workers employed, said David Stowell, professor of finance at Northwestern University's Kellogg School of Management.

The creditors have argued that forgiveness of his debt should not be accepted as part of the bid, because Lampert loaned Sears the money when he was CEO.

Stowell, speaking shortly before the Tuesday hearing, said he wouldn't be surprised to see Lampert sweeten his offer before the bankruptcy auction.

Other reports by LeisureTravelAid

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