Deal Keeps Sears Open at Least 1 More Week

After a flurry of last-minute negotiations, Sears, which filed for bankruptcy protection in October, will live on for at least another week.

The deal, announced Tuesday at a bankruptcy court hearing, staves off the threat of liquidation and gives the company’s chairman, Edward S. Lampert, an opportunity to sweeten his $4.4 billion offer to acquire Sears and keep its roughly 400 stores operating.
Lampert, a hedge fund manager who took control of Sears in 2005, is now expected to officially bid for the company at a court-supervised auction next week.
Lampert, the company’s largest shareholder, is the only bidder seeking to acquire Sears and maintain it as a “going concern.” The other option under consideration entails selling off all of the company’s real estate, inventory, intellectual property and other assets.
The company’s largest creditors will ultimately decide whether they would recover more money by letting Lampert keep the company going or by selling Sears off piecemeal.
On Friday, Sears determined that Lampert’s bid was not adequate, which led analysts and investors to believe that the retailer was headed toward a fire sale.
But lawyers for a committee of independent directors and Lampert negotiated through the weekend and Monday in an effort to save the company. The bankruptcy hearing, scheduled for Tuesday morning in White Plains, New York, was delayed by three hours, while the two sides talked.
To buy an extra week, Lampert, through his hedge fund ESL Investments, said he would put down a $17.9 million nonrefundable deposit — which is how much it will cost to keep Sears open through Monday’s auction.
This was an important concession to creditors, many of whom believe their losses mount every day that the company keeps its doors open.
The bankruptcy judge, Robert D. Drain, said the deal was “a good development” because it could give Sears a chance to survive.
“This is a win for Lampert,” said David H. Wander, a lawyer at Davidoff Hutcher & Citron, who is representing two Sears vendors in the bankruptcy case. “But it really is just kicking the can down the road again.”