New York City: Sears is getting another reprieve from liquidation after its chairman and largest shareholder revised his bid to save the iconic brand.
The Hoffman Estates, Illinois-based retailer says it has accepted Eddie Lampert’s bid through an affiliate of his ESL hedge fund that could keep 425 stores open and save tens of thousands of workers, according to a hearing on Tuesday at the bankruptcy court in White Plains, N.Y. The bid now requires Lampert to deposit $120 million by 4 p.m. Wednesday through his hedge fund.
The revised bid is not official, and will be evaluated in an auction set for Jan. 14 that will compete with other bids from liquidators looking to shut it down.
EARLIER: Sears: Fate hangs in balance at bankruptcy hearing
Sears Holdings and Kmart could soon join the graveyard of deceased American retailers if they can’t reach a last-minute deal to save themselves in bankruptcy.
Sears Holdings, which owns the two retailers, likely will reveal Tuesday whether it will consider a controversial offer by its chairman and largest investor to keep a shrunken version of the company alive.
Without a deal, liquidation appears imminent. It could even proceed within weeks.
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 their attention 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.
With the company teetering on the edge of implosion, attorneys for Sears will appear before a federal bankruptcy judge in New York at 10 a.m. to provide updates on the company’s asset bidding process.
The retailer received an acquisition offer from chairman and former CEO Eddie Lampert’s hedge fund, ESL Investments, that would keep about 425 stores open and 50,000 employees working.
But that deal includes a mix of financing that Sears advisers have reportedly 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.
Sears and ESL have been silent since the retailer missed a Friday deadline to report whether it would consider Lampert’s offer, which his firm valued at $4.4 billion. Both companies have declined multiple requests for comment since then.
If the company deems the bid “qualified” to compete in an auction for the company’s assets, that process is expected to unfold Monday.
Liquidators, which specialize in the dismantling of bankrupt companies, are expected to compete for the company’s assets.
Although bankrupt companies can consider the economic implications of their potential collapse, they are typically supposed to choose the course that serves the best interests of their creditors.
If Sears and Kmart are worth more dead than alive, their fates may be sealed.