Sears believes Eddie Lampert’s bid to save the company is short. Without a deal, company could liquidate.

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Sears believes Eddie Lampert’s bid to save the company is short. Without a deal, company could liquidate.

The offer has raised a number of flags, the people said. It is short of covering the fees and vendor payment it owes, making it “administratively insolvent.”

A continuing issue is the $1.8 billion that Lampert put toward his offer by forgiving debt owed to ESL through a so-called credit bid. The restructuring committee advising Sears is not confident the bankruptcy judge will allow Lampert to use a credit bid without addressing a pending investigation about Sears transactions under Lampert’s ownership, the people said.

Sears’ unsecured creditors have said there may be claims against Sears for those deals, which include Sears’ spinoff of Lands’ End and transactions with Seritage Growth Properties, a real estate investment trust Lampert created through some Sears’ properties.

ESL has stressed that all transactions it did with Sears during Lampert’s tenure were approved by Sears’ board.

As with all bankruptcy negotiations, it remains possible either side will make concessions to end the disagreement. The two parties therefore could come to a resolution to divert liquidation.

Lampert has in his corner several powerful bargaining cards. His offer is the singular guarantee of the employment of roughly 50,000 workers and preservation an American icon. Keeping Sears alive may be the only way to ensure its other businesses, like Sears Home Services, can continue on as well. ESL has argued that its offer, therefore, can provide Sears’ creditors with the most value.

ESL has pushed for Sears to keep its bid in the ring until at least Jan. 14, when it could compare it against other offers for its various businesses, one of the people said. Sears is meeting with the bankruptcy judge Friday to discuss its decision, another person said.

But if Sears demands more cash from ESL, it will likely face opposition from Lampert.

Lampert had, over the course of several years, poured billions of dollars into Sears through ESL. He was driven by a belief in his ability to turn the company around, according to people familiar with his thinking. Lampert believed he could save Sears — which hasn’t turned a profit since 2010 — by converting shoppers from its loyalty program, Shop Your Way.

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