Sears Chairman Eddie Lampert bid gets court approval

Lloyd Doyle
February 10, 2019

Lampert, who is bidding $5.2 billion for the assets through his hedge fund, also wants to buy some of Sears' best known brands, such as Kenmore appliances and DieHard batteries. Those creditors will now have to wait to find out how much they get of the money they are owed, but it is likely to be pennies on the dollar in many cases.

Lampert has said that his fund has been a constant source of financing for Sears, which kept the retailer alive, and that all of his transactions were proper. They argue Sears stands no chance to survive long term, and it should be shuttered and liquidated.

Drain rejected arguments from a group of creditors that the sale process was unfair.

The judge's decision saves Sears from liquidation, but still unanswered is whether Lampert can reinvigorate a retail chain that many consumers have fond memories of, but no current relationship with. He said dumping so many stores and other assets onto the market at the same time would reduce the amount of money that would be raised in liquidation. Although Drain did not have jurisdiction to decide the issue, he gave an advisory opinion in favor of Sears' claim that ESL is responsible for those liabilities.

A US bankruptcy judge approved Sears Chairman Edward Lampert's $5.2 billion takeover bid of the company, saving off liquidation of the troubled retailer and hundreds of stores. PBGC believe the two pension funds for 90,000 Sears retirees and beneficiaries are underfunded by $1.4 billion. It also took over assets in the plan. He said he may rule from the bench at the conclusion of the hearing.

The agency had agreed to reduce the amount of underfunding it would ask Sears to cover from $1.7 billion down to $800 million, according to Schrock.

Despite the court's approval of the takeover, Sears continues to face "major hurdles", Moody's department store analyst Christina Boni said. Attorneys for the creditors suggested without an agreement on the issue the deal should not be allowed to close.

Still unresolved is a dispute between Sears and ESL over which is responsible for paying $166 million for inventory received after Sears filed for Chapter 11 bankruptcy on October 15. And the company's business plans, filed with the bankruptcy court, suggest that future store closings and real estate sales could be on the horizon.

It was the only proposal that offered to keep the company, which was once America's largest retailer, in operation.

When Lampert combined Sears and rival chain Kmart, the merged retailer had almost 3,500 stores and employed more than 300,000 people, a work force that shrank to 68,000 when it filed for bankruptcy.

Other reports by Iphone Fresh

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