Sears saved from bankruptcy with buyout sale
A bankruptcy judge accepts a bid from Sears' CEO to buy the chain.
Sears has been saved from the brink of closure again. A bankruptcy judge approved a $5.2 billion takeover plan from chief executive officer, (CEO), Eddie Lampert, to keep the 126-year-old chain open.
How did Eddie Lampert buy Sears?
Sears is a troubled retailer with stores that hadn’t been profitable since 2010 and was unable to compete with online retailers like Amazon. The chain was on the brink of bankruptcy, but Lampert submitted a bid to buy the company outright. A last-minute buyout bid through Lampert’s ESL hedge fund was accepted after about a month of negotiations. He will take on one of the company’s bankruptcy loans and was allowed to use $1.3 billion in a credit bid. The reprieve from bankruptcy means 425 stores will remain open and 45,000 employees will be retained.
Can Sears still stay open?
Many investors and even politicians are sceptical about whether this latest sale will save Sears. A group of unsecured creditors who have yet to be paid by Sears objected to the sale and blamed Lampert for its financial predicament.
‘The tortured story of Sears reads like a Shakespearean tragedy.Lampert and ESL managed Sears as if it were a private portfolio company that existed solely to provide the greatest returns on their investment, recklessly disregarding the damage to Sears, its employees and its creditors,’ wrote the creditors.
US Senator, Elizabeth Warren, questioned Lampert’s leadership and ability to protect employees in a letter to the CEO.
‘I am concerned that under your leadership, Sears may continue to struggle and employees will continue to face uncertainty and anxiety over their future employment, and ongoing risks to their benefits and economic security,' wrote Warren in a letter to Lampert.
Despite the cynicism towards Lampert, he has managed to save a US retail institution-at least for now.
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