Lampert Makes Bid To Acquire Sears

Lloyd Doyle
December 8, 2018

Both the unsecured creditors' committee and a special committee of the board are investigating those deals that occurred before Sears filed for bankruptcy protection on October 15.

Edward Lampert and his private equity firm ESL Investments have made a $4.6 billion bid for the bankrupt retailer, hoping to save thousands of jobs and continue to operate the business online and through a mix of small- and large-footprint stores.

Sears Holdings has no Sears or Kmart stores left in the Corridor.

The Sears chairman and ESL founder own just under half of the Hoffman Estates, Illinois, company, according to FactSet.

"Sears is an iconic fixture in American retail and we continue to believe in the company's vast potential to evolve and operate profitably as a going concern with a new capitalization and organizational structure", Lampert wrote in a letter detailing the offer. The committee of unsecured creditors in the bankruptcy case has an ongoing investigation into "the possibility that ESL and other insiders may have exercised undue influence to siphon value away from the company on favorable terms", a court filing states, adding that the 2015 deal with Seritage Growth Properties is especially concerning. ESL would also be protected from liability for any of its pre-bankruptcy transactions, said one expert. That could a concern for other creditors.

The bid comes days after Sears filed an updated budget with the Bankruptcy Court showing the retailer expected to earn nearly $246 million less during the critical holiday shopping season than it forecast when it declared bankruptcy.

In a Thursday filing with the U.S. Securities and Exchange Commission, former Sears Holdings Corp.

That sum could go dramatically up or down, depending on how the bankruptcy process evolves, the publication noted. The more recent budget came after Sears said it planned to sell 505 stores that would continue in business, about 100 more than initially planned, which may have affected revenue forecasts. Lampert stepped down as CEO when the bankruptcy proceedings were announced, but remained the company's chairman and has been expected to submit an offer to buy the chain through his hedge fund.

Yet by 2016 Sears was locked in a vicious cycle of declining revenue and mounting debt, as customers defected from stores viewed as outdated and stocked with less-than-enticing merchandise.

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