Sears is said to be seeking to start the liquidation process, leading to a potential shuttering of its doors after 126 years.
Sears Holdings Corp will ask a bankruptcy judge on Tuesday if it can proceed with the liquidation after it could not reach an agreement on Chairman Edward Lampert's $4.4 billion takeover bid, casting doubt on the survival of the 126-year-old U.S. department store chain, people familiar with the matter said.
Lampert's bid, made through his hedge fund, ESL Investments, was said to have been rejected because it would not cover the fees and vendor payment Sears owes, leaving it 'administratively insolvent,' sources told CNBC.
Sears is said to be seeking to begin the liquidation process, three months after filing for bankruptcy. The company began closing stores, like this one in Massachusetts in October
Should Sears 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 popularity of online shopping exacerbates the fierce price competition facing brick-and-mortar stores.
Sears, which filed for bankruptcy protection last October, may have to close hundreds of stores it is still operating, potentially putting up to 68,000 people out of work, the sources said. Its vast inventories of tools, appliances and store fixtures will be sold in fire sales, the sources added.
Lawyers for Lampert and his hedge fund, ESL Investments Inc, also plan to present details of his offer and make the case for renewing efforts to save Sears in bankruptcy court on Tuesday, the sources said.
U.S. Bankruptcy Judge Robert Drain in the Southern District of New York, who is presiding over the case, could decide to give Lampert more time to improve on his bid, the sources said. A bankruptcy auction for Sears' assets is not due until January 14.
The sources asked not to be identified because the matter is confidential. Representatives for Sears and Lampert offered no immediate comment.
Sears will now plan for a separate February auction of its assets and real estate, some of the sources said. Lampert, who also made a back-up offer for some of the assets as part of his initial $4.4billion proposal, will make another bid, the sources added.
Sears is said to have rejected its chairman Edward Lampert's $4.4billion takeover bid because it would not cover the fees and vendor payment Sears owes
Should the judge approve the liquidation request, the 126-year-old company will likely close hundreds of stores, leaving 68,000 people without jobs. A Sears sign is shown outside a New York store on January 7, the day after it was shuttered
A main point of contention in the negotiations between Lampert and Sears centered on whether Lampert's bid fully addressed the bankruptcy costs that Sears has racked up, some of the sources said.
The costs, which include bills from lawyers and financial advisers, are expected to exceed $200million, those sources said.
Lampert's bid proposed forgiving $1.3billion of debt he holds in exchange for ownership of the reconstituted Sears, a bankruptcy maneuver known as a credit bid.
In addition, Lampert wanted a release from legal exposure related to a series of transactions he completed with the retailer before it filed for bankruptcy protection. Those made him the company's biggest creditor, in addition to its largest shareholder.
Lampert's offer did not include putting up cash to back the credit bid. That raised concerns in the negotiations since the maneuver might not be allowed in court, the sources said, given ongoing investigations of Lampert's pre-bankruptcy deals, which the hedge fund manager maintains were proper.
Unsecured creditors have pushed for Sears to liquidate, partially because they contend they will realize a better financial recovery if it does. Those creditors, which include Sears landlords and bondholders, have also questioned Lampert's pre-bankruptcy transactions with the retailer.
The liquidation of Sears, which includes discount chain Kmart, would follow a decade of revenue declines, hundreds of store closures, and years of deals by billionaire Lampert in an attempt to turn around the company he put together in 2005 through an $11billion deal.
Sears dates back to the late 1880s and its mail-order catalogs with merchandise from toys, medicine, gramophones, automobiles, kit houses and tombstones made it the Amazon.com Inc of its time.
The iconic retailer gradually lost its shine, however, as consumers turned to e-commerce and brick-and-mortar rivals such as Walmart Inc and Target Corp.
Lampert had pledged to restore Sears to its glory days, when it owned the tallest building in the world as well as a radio station and Allstate insurance.
But critics say Lampert let the stores deteriorate over the years, even as he bought the company's stock and lent it money.
The largest U.S. toy retailer, Toys `R´ Us, tried to emerge from its 2017 bankruptcy filing but was also forced to liquidate six months later, after creditors lost confidence in its turnaround plan.
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https://hienalouca.com/2019/01/08/sears-seeks-to-liquidate-after-rejecting-4-4billion-takeover-bid-that-would-save-126-year-old-store/
Main photo article Sears is said to be seeking to start the liquidation process, leading to a potential shuttering of its doors after 126 years.
Sears Holdings Corp will ask a bankruptcy judge on Tuesday if it can proceed with the liquidation after it could not reach an agreement on Chairman Edward L...
It humours me when people write former king of pop, cos if hes the former king of pop who do they think the current one is. Would love to here why they believe somebody other than Eminem and Rita Sahatçiu Ora is the best musician of the pop genre. In fact if they have half the achievements i would be suprised. 3 reasons why he will produce amazing shows. Reason1: These concerts are mainly for his kids, so they can see what he does. 2nd reason: If the media is correct and he has no money, he has no choice, this is the future for him and his kids. 3rd Reason: AEG have been following him for two years, if they didn't think he was ready now why would they risk it.
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Dianne Reeves US News HienaLouca
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