Economy

Sears reaches deal to stay in business, for now

Sears reaches deal to stay in business, for now”

The creditors have argued that forgiveness of his debt should not be accepted as part of the bid, because Lampert loaned Sears the money when he was CEO.

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.

A recent Bloomberg report said Sears representatives summoned liquidation firms and other advisers to emergency meetings on Friday after it rejected the bid and that the retailer would now focus on preparing for liquidation sales to start as early as mid-January.

The talks continued into Tuesday.

Under the new terms, Lampert must come up with a $120 million cash payment by Wednesday afternoon, as a down payment.

A main point of contention in the negotiations between Lampert and Sears previously centered on whether Lampert's bid fully addressed the bankruptcy costs that Sears has racked up, according to sources familiar with the matter.

It would bring an end to a retail name that goes back to 1893.

Sears Holdings Corp shares surged on the news, rising to a daily high of $0.365 in the over-the-counter markets as of the time of writing.

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.

Lampert said he plans to offer jobs to 50,000 Sears and Kmart employees.

But it wasn't immediately clear just how much additional cash Lampert will pay for the assets. It is known he expects the new Sears to borrow $1.3 billion from three leading banks.

If Sears doesn't accept the $4.4 billion bid, Transform Holdco said it also would bid individually on some assets, including real estate, certain intellectual property and the Sears Home Services business. 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. The attorney does not represent Lampert. It also sought a release from any liability related to transactions between the hedge fund and the retailer prior to Sears' bankruptcy filing. In bankruptcy court filings it called Sears previous plans to stay in business "nothing more than wishful thinking " and "an unjustified and foolhardy gamble with other people's money".



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