Sears gets another chance to stay in business

Sears gets a last-minute reprieve from liquidation.

 Sears building Source: Bloomberg

Sears is getting another chance before liquidation. Attorneys for the chain have accepted a bid from chief executive officer, (CEO), Eddie Lampert, to give him a last-ditch effort to purchase the retailer to keep 425 stores open.

Sears strikes deal to stay open for now

The troubled retailer has been on the brink of closure for years. Dozens of stores were already closed after sales plummeted over the last seven years. There were earlier reports that the chain was preparing for liquidation after rejecting Lampert’s effort to purchase the company through his hedge fund. Sears advisors initially rejected the $4 billion offer, but now attorneys have accepted the bid. The retailer’s lawyer, Ray Schrock, said that the deal was struck after ‘virtually round-the-clock negotiations’.

Sears released a statement expressing hope for this latest effort to save the store.

‘Our going concern bid provides the best path forward for the company, the best option to save tens of thousands of jobs and is superior for all of Sears’ stakeholders to the alternative of a complete liquidation,’ said Sears in a statement.

Details of the agreement

Lampert asked other lenders to help him finance the deal, including Bank of America. The potential purchase of Sears isn’t the final step of saving the retailer. The sale only starts an auction of the store’s goods that has to be finished by January 14. The CEO also offered to forgive $1 billion in debt and to make a $120 million cash payment to 50,000 Sears and Kmart employees.

Will latest deal save Sears?

Though the offer is a glimmer of hope for Sears, there are still obstacles. The plan still has to be approved by a judge and Lampert could still be outbid by other business owners that want to liquidate and sell Sears’ assets. Financial advisors, like, Burt Flickinger, managing director of Resource Group, is sceptical that Sears can be saved by this latest 11th hour agreement.

‘Lampert and ESL have proven for years that they are the problem and they can’t be the solution. Even with an approved bid, the company is heading for another iceberg and will sink before the winter weather is gone,’ said Flickinger.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

See an opportunity to trade?

Go long or short on more than 16,000 markets with IG.

Spread bet and trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Bid
Offer
-
-
China 300
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.