Sears received another lifeline Tuesday when the company's chairman and largest shareholder promised to line up the necessary financing to keep the struggling department store chain afloat.
The reprieve came after what Sears lawyers described to a bankruptcy judge in White Plains, N.Y., as "round-the-clock" negotiations after the company board's initial rejection of Eddie Lampert's proposal, which sought to preserve 425 stores and 50,000 workers.
According to lawyers close to the matter, one of the main sticking points was that the $4.4 billion bid, which included $1.3 billion in financing from three financial institutions, didn't include cash.
Lampert is now required to deposit $120 million by 3 p.m. Central time today to get a chance to take part in an auction against other bidders, said Ray Schrock, Sears' lead attorney. Of that amount, $17.9 million is nonrefundable, he said.
The revised bid is not official and will be evaluated in an auction set for Monday that will compete with other bids from liquidators looking to shut it down.
Bankruptcy Judge Robert Drain reminded the Sears lawyers that the company has an obligation to review all its options, not just the offer from Lampert and his hedge fund, ESL Investments Inc.
At the same time, the 132-year-old retailer is still preparing for liquidation, Schrock said.
The final push to save Sears from liquidation stretched over the weekend and into three hours of negotiations at the courthouse Tuesday morning.
The hearing was delayed twice as about a dozen lawyers for Sears and ESL continued talks in the corridor, decorated by a large Christmas tree and a menorah, outside the courtroom. The advisers twice updated Drain in his chambers. At one point, the lawyers were talking at once and a court officer said, "Sounds like a zoo in here."
"It is a zoo!" one of the attorneys replied.
The eleventh-hour negotiation is yet another twist in the rocky journey of Sears whose fate has been hanging in the balance, particularly since it filed for Chapter 11 bankruptcy on Oct. 15. As of the filing, the company had just under 700 stores and 68,000 workers.
Sears, which began as a mail order watch business in 1886 and grew to be the largest retailer in the world, has been in a slow decline, hobbled by the recession 10 years ago and outmatched by competitors like Amazon and Walmart.
Under Lampert, Sears has bought time over the years by spinning off stores and putting on the block the brands that had grown synonymous with the company, such as Craftsman. Lampert lent his own money and put together deals to keep the company going, turning whatever profit he could for his hedge fund.
Information for this article was contributed by Anne D'Innocenzio of The Associated Press; and by Steven Church, Josh Saul, Eliza Ronalds-Hannon and Lauren Coleman-Lochner of Bloomberg News.
Business on 01/09/2019