Sears to Live On as Lampert’s Bid Wins Approval From Bankruptcy Court
(Bloomberg) -- It’s official: Sears Holdings Corp. survives. For now, at least.
Chairman Eddie Lampert’s $5.2 billion bid to keep the once-dominant retailer alive was approved by U.S. Bankruptcy Judge Robert Drain on Thursday. The court decision, made during a hearing in White Plains, New York, seals Lampert’s quest to initially preserve about 425 stores and 45,000 jobs.
Drain rejected arguments from a group of creditors that the sale process was unfair. Those creditors have argued that Lampert, who engineered the 2005 merger of Sears Roebuck and Kmart, plundered the company’s assets and failed to invest enough in stores to make it successful. But Drain said those claims shouldn’t stand in the way of Sears’s sale and instead would likely be decided in future lawsuits.
After approving the deal, Drain took the unusual step of defending Lampert. Throughout the bankruptcy, the hedge-fund manager “has been subject to substantial verbal abuse,” Drain said, with critics portraying him as a cross between a scheming businessman and “Barney Fife,” the hapless deputy from a 1960s TV sitcom.
“He has a chance now not to be a cartoon character and to take action that would in fact be of great meaning,” Drain said, urging Lampert to be open with his plans for Sears to employees.
Lampert has said that his fund has been a constant source of financing for Sears, which kept the retailer alive, and that all of his transactions were proper.
The retailer’s future hung by a thread just a few weeks ago as Lampert’s initial overtures were rejected, with creditors arguing that the company was worth more dead than alive.
The bankruptcy-court drama began in October when the 126-year-old retailer filed for Chapter 11 protection after years, and billions of dollars, of losses.
Initially, his efforts fell short and liquidation seemed all but certain. But with tens of thousands of jobs at stake, Drain encouraged the participants to seek an improved deal from Lampert, with key parts crafted during a marathon meeting in Manhattan last month.
Over the next few years, Lampert’s business plan calls for him to sell about $200 million a year in real estate and more than $900 million in assets overall, according to court testimony Thursday. A Sears executive said during the hearing that the company wasn’t sure how many stores it would sell in meeting those financial goals.
Those plans may have prompted Drain’s warning to Lampert at the end of Thursday’s hearing.
“A clear communications process with vendors and employees is really warranted,” Drain said.
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