Sears Takeover Bid Fails, Asks Bankruptcy Judge To Liquidate

Lloyd Doyle
January 8, 2019

The demise of the Big Store Lampert in 2002 bought Kmart debt as the discount retailer entered Chapter 11 bankruptcy protection, and at the same time purchased Sears shares.

A bankruptcy judge is giving Sears Chairman Eddie Lampert another chance to buy the department store chain out of bankruptcy and save roughly 55,000 jobs. Sears will then hold an auction January 14, when it will compare Lampert's offer against others by liquidators. It is still possible that those wishing to shutdown the company will bid more for the assets than Lampert is offering. In recent years, Toys "R" Us, RadioShack and Sports Authority have followed that path to the graveyard. Drain said other parties could submit new or improved bids, and Sears' financial advisers would let them know if they would be considered at the auction.

But it wasn't immediately clear just how much additional cash Lampert will pay for the assets. It is known he expects the new Sears to borrow $1.3 billion from three leading banks. The court hearing that was set for Tuesday morning was delayed until the afternoon, a development that Reuters called "sign that Sears and Lampert were continuing to negotiate".

US Bankruptcy Judge Robert Drain in the Southern District of NY, who is presiding over the case, could decide to give Lampert more time to improve his bid, the Reuters sources said, adding that a bankruptcy auction for Sears' assets is not due until January 14. The creditors' attorneys question whether the terms of those loans unduly benefited Lampert and his hedge fund rather than Sears.

Lampert's background as a hedge fund manager, once deemed the next Warren Buffett, proved to be poor preparation for battling retail titans like Walmart, Target and Amazon.

If Sears doesn't accept the bid, it will likely have to ask the court for permission to start shutting down the business.

Other reports by Iphone Fresh

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