NEW YORK – Sears has confirmed that chairman and largest shareholder Eddie Lampert’s hedge fund has won tentative approval for a $5.2 billion plan to buy 425 stores and the rest of its assets.
The move, announced Thursday, preserves 45,000 jobs and is subject to court approval Feb. 1. Unsecured creditors will have the opportunity to object before then.
The deal is expected to then close Feb. 8.
The agreement follows marathon negotiations in an auction that started early Monday as Lampert was fending off demands from unsecured creditors, who were pushing for liquidation.
Lampert was the only one to put forth a proposal through an affiliate of ESL Investments Inc. to rescue the floundering company in its entirety. He had sweetened his bid multiple times.
“At every stage in this process, ESL has worked tirelessly to help Sears re-emerge from bankruptcy, including by enhancing our offer several times, because we believe Sears has a future as a profitable company that can succeed in today’s competitive retail landscape,” ESL said in a statement.
Still, many experts believe a smaller version of the retailer will not be viable as it faces increasing competition from the likes of Amazon and Walmart.
The deal doesn’t release Lampert from legal liability over previous transactions, according to people with knowledge of the situation. Lampert had been asking for such a guarantee throughout the negotiations to head off claims from creditors who said he unfairly profited from earlier bailout transactions, such as those involving Lands’ End and Seritage Growth Properties. Lampert has said the deals were properly crafted and kept the chain alive.
The bid will save 45,000 jobs, fund some severance costs and reinstate severance benefits for eligible employees in a new company, according to an ESL statement. ESL and Lampert previously said the plan would save as many as 50,000 jobs at Sears, which employed 68,000 when it went bankrupt in October. The bid will also honor extended warranties on products previously sold by Sears.
Lampert beat out bids from liquidators that would have forced the 126-year-old department-store chain to shut down. The agreement, reached after two days of negotiations in New York, still needs to be approved by the federal bankruptcy judge overseeing the case.
Sears’ Hoffman Estates, Illinois-based corporate parent, which also owns Kmart, had 687 stores and 68,000 employees at the time of its bankruptcy filing in mid-October. At its peak in 2012, its stores numbered 4,000.
Bloomberg contributed to the report.
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