Sears Will Remain on Life Support

But creditors are reportedly ready to pull the plug

Sears will remain open until at least February 1. Getty Images
Headshot of Lisa Lacy

Chairman Edward Lampert’s quest to keep 126-year-old department store Sears alive proved successful at the 11th hour as his firm, ESL Investments, was named the highest bidder at a recent auction.

A person familiar with the matter confirmed the news in an email. The person did not comment further. A spokesperson for Sears declined to comment.

Also citing ‚Äúpeople familiar with the matter,‚ÄĚ the Wall Street Journal reported¬†Lampert upped his bid from $5.1 billion¬†to $5.3 billion, which will keep about 400 stores open and save as many as 50,000 jobs. Sears had 2,300 stores at its peak about a decade ago.

A sale hearing is scheduled for February 1, during which the WSJ says U.S. Bankruptcy Court Judge Robert Drain still has to approve Lampert’s plan.

Negotiations dragged on until 2 a.m. Wednesday and, according to the WSJ, creditors are not thrilled by the outcome.

In a revised bid last week, Lampert offered to assume up to $663 million in additional liabilities from his previous offer in exchange for 57 additional real estate properties; accounts receivable for home warranties sold in 2018 with a value of approximately $53.6 million; other accounts receivable with a value of at least $256 million; additional inventory with a value of up to $166 million; and prepaid inventory with a value of at least $147 million.

Reuters reported¬†Sears had selected advisory firm Abacus Advisory Group and a ‚Äúfirm run by retail magnate Jay Schottenstein‚ÄĚ to close all stores and sell remaining inventory and store fixtures if negotiations fell through.

Citing bankruptcy documents, Reuters said Abacus has worked with Sears for 16 years and has liquidated more than 800 of its stores to date.

The WSJ reports the Abacus bid was widely supported by Sears’ creditors and landlords alike. Abacus has previously worked with a veritable who’s who of troubled retailers, including Federated Department Stores, Emporium, Filene’s Basement, KB Toys, Kmart, Montgomery Ward and the Sharper Image. It did not respond to a request for comment.

Creditors are reportedly also displeased Lampert‚Äôs deal includes $1.3 billion in debt forgiveness for ESL Investments‚ÄĒand that Lampert will be absolved of liability in future lawsuits ‚Äúrelated to a series of spinoffs that creditors say might have siphoned valuable assets away from the company.‚ÄĚ

Sears sold its popular Craftsman line of tools to Stanley Black & Decker in March 2017 for $900 million. Craftsman is now sold at home improvement retailer Lowe’s.

Sears‚Äô appliance brand Kenmore and car-battery brand DieHard are two additional assets that have been shuffled around‚ÄĒand Lampert has offered to acquire Kenmore and DieHard IP from Sears subsidiary KCD IP for additional cash.

Sears filed for bankruptcy in October 2018.

@lisalacy Lisa Lacy is a senior writer at Adweek, where she focuses on retail and the growing reach of Amazon.