Sears gets another chance to stay in business
Sears gets a last-minute reprieve from liquidation.
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.
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