Sears has not died ... yet. Sears Holdings Corp. agreed to review again a proposal from the company's president and main shareholder, Eddie Lampert, who is trying to save what is left of the company after have filed for bankruptcy last October.
Lampert has a day to make a new offer that will convince creditors not to liquidate Sears permanently, Ray Schrock, a lawyer for the company, told bankruptcy judge Robert Drain during a hearing in New York on Tuesday.
Although the president has gotten more time to review his offer that aims to keep alive the diminished chain of stores and more than 50,000 jobs, to continue in the negotiation also has to make a deposit of 120 million dollars on Wednesday.
The hedge fund of Sears president, ESL Investments, presented on December 28 a proposal to buy in 4,400 million dollars the retail chain in order to prevent its liquidation by bankruptcy. The goal is to keep functioning 425 remaining stores of Sears and Kmart (Another chain of discount stores that are also owned by Sears Holdings Corp.), of 3,000 that it once had.
That is to say, that to survive, only the remaining stores of the iconic retail brand, which was once the largest chain of department stores in the United States, would do so. Sears had reported late last year that it decided to close 80 more stores because it was on the verge of liquidation.
The brand, which began as a retailer of catalog sales in the 1880s, began to go bankrupt since the Great Recession and competition from other retail chains and Internet sales of competitors like the giant Amazon, that this week became just the best valued company.
Sears Holdings Corp. joins the list of retail brands whose control was taken over by hedge funds after they collapsed because of their hefty indebtedness.
Lampert has borrowed his own money and has reached agreements to keep the company afloat and deliver any profit it could obtain to the ESL risk fund. Lampert and ESL have tried to buy the rest of Sears up to 4,600 million dollars in cash and shares, but this does not seem enough to recover their money to creditors, who seem to see the liquidation of the company more viable.
One of the points of conflict in the negotiation would have been the coverage of fees for financial advice and payments to suppliers, accumulated during the bankruptcy process and that would make the offer "administratively insolvent" for the stores.
Now Lampert and his investor fund have a day to improve the proposal, that of failing again the auction of assets of the company, which is scheduled for January 14, will proceed.
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