Sears Holdings Corp agreed to consider a revised takeover bid from billionaire Chairman Edward Lampert, temporarily staving off a liquidation that would have spelled the end of the 126-year-old U.S. department-store chain.
US department store Sears is on the brink of collapse as the company faces possible liquidation. Photo: 123RF
Lampert's latest attempt to rescue Sears came after his previous $4.4 billion ($NZ6.5bn) bid fell short, prompting the retailer to make liquidation preparations ahead of a bankruptcy court hearing in New York today.
An attorney for Sears told U.S. Bankruptcy Judge Robert Drain that Lampert is expected to submit a revised offer for the retailer, along with a $120 million ($NZ180m) deposit. The attorney did not disclose further details of the new offer, which materialized after what he described as several days of round-the-clock negotiations.
Drain said that Sears will weigh Lampert's offer against a proposed liquidation during a bankruptcy auction on 14 January. Should Lampert's offer falter again, he will forfeit more than $17 million ($NZ25m) from his deposit to Sears creditors.
Lampert's bid, which recently envisioned keeping open 425 stores and preserving up to 50,000 jobs, still faces hurdles that could cause it to unravel in the coming days and prompt Sears to shut down for good.
"This is a large company...that affects a lot of people," Drain said during the hearing. He called the expectation of a revised bid from Lampert a "good development" that could allow Sears to "survive as a going concern, at least in part."
The latest twist in Sears' monthslong bankruptcy proceedings offers new hope that the teetering retailer could remain operational, albeit in smaller form, sparing the jobs of many of its 68,000 workers. Were Sears to liquidate its assets, it would become one of the most high-profile victims in the wave of bankruptcies that has swept the retail sector in the last few years, as the explosion in online shopping exacerbates the fierce price competition facing brick-and-mortar stores.
In a stark contrast between e-commerce firms and many physical retailers, Amazon became the world's most valuable company for the first time this week, reaching a market capitalization of close to $800 billion ($NZ1.19trillion).
Sears' agreement to reconsider Lampert's offer tables for now controversies that pushed the retailer to the brink.
As part of his bid, Lampert requested a legal release that would clear him from exposure to litigation over transactions he engaged in with Sears before it filed for bankruptcy protection.
As of Tuesday, unsecured creditors were unwilling to give him the release, as they remained intent on investigating some of the past deals, said a person familiar with the discussions. The deals, which Lampert maintains were proper, helped make him the company's largest creditor, in addition to its biggest shareholder.
Lampert's offer also included a proposal to forgive $1.3 billion ($NZ1.9bn) of debt he holds in exchange for ownership of the reconstituted Sears, a bankruptcy maneuver known as a credit bid that has also drawn objections from creditors.
Unsecured creditors, which include Sears landlords and bondholders, have pushed for the retailer to liquidate, partially because they contend they will realize a better financial recovery if it does.
Abid Qureshi, an attorney representing those creditors, said there are concerns about Lampert's takeover bid, including "significant, viable claims" against Lampert regarding pre-bankruptcy transactions.
- Reuters