Sears rejects bailout bid, hundreds of stores likely to close

Ann Santiago
January 9, 2019

Per the report, ESL must make a $120 million deposit by Wednesday afternoon, which will allow its bid to be compared against liquidator offers when the Sears auction takes place on January 14.

It gives Sears a chance to survive, which appeared to be slipping way heading into the hearing.

Sears Holdings has rejected Chairman Eddie Lampert's bid to save the 126-year-old company, setting the storied retailer with more than 50,000 employees on a path to liquidation, CNBC reported, citing sources familiar with the matter.

Lampert's latest attempt to rescue Sears came after his previous US$4.4 billion bid fell short, prompting the retailer to make liquidation preparations ahead of bankruptcy court hearing in NY on Tuesday.

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.

Sears' decision to review a revised bid from Lampert came after several days of "virtually round-the-clock negotiations", said Ray Schrock, an attorney for Sears Holdings Corp.

Sears was down almost 94% in the past year.

In November, the creditors committee raised questions about financial dealings between Lampert, ESL and Sears, saying those transactions "may be part of an extended pattern of conduct that served to benefit certain (insider) equity holders", according to court filings.

There is a court hearing Tuesday morning in White Plains federal bankruptcy court, after which Sears is expected to announce whether it will liquidate, according to sources. It is still possible that those wishing to shutdown the company will bid more for the assets than Lampert is offering.

The bid now requires Lampert to deposit $120 million by 4 p.m. Wednesday through his ESL hedge fund.

Lampert and his hedge fund argue the loans were proper and made to keep Sears alive.

Tuesday's court hearing in the Southern District of NY comes a day after the retailer took to social media to dispel the notion it was not longer in the running, saying in a tweet: "We may be slowing down, but we are not out of the race just yet".

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