Economy

Sears Holdings Likely Heading to Liquidation

Sears Holdings Likely Heading to Liquidation

Lampert entered the bid through Transform Holdco LLC, an affiliate of his private equity firm, ESL Investments Inc.

A bankruptcy judge is giving Sears Chairman Eddie Lampert another chance to buy the department store chain out of bankruptcy and save roughly 55,000 jobs.

Sears Holdings has rejected Chairman Eddie Lampert's bid to save the 126-year-old company, setting the storied retailer with more than 50,000 employees on a path to liquidation, CNBC reported, citing sources familiar with the matter.

US Bankruptcy Judge Robert Drain in the Southern District of NY, who is presiding over the case, could decide to give Lampert more time to improve his bid, the Reuters sources said, adding that a bankruptcy auction for Sears' assets is not due until January 14. If the court sides with Sears, the company will go ahead with a scheduled auction of company assets January 14.

The creditors have argued that forgiveness of his debt should not be accepted as part of the bid, because Lampert loaned Sears the money when he was CEO.

Under Lampert, Sears has bought time over the years by spinning off stores and putting on the block the brands that had grown synonymous with the company, such as Craftsman.

The revised deal was reached after days of "virtually round-the-clock negotiations", Sears attorney Ray Schrock told the court.

More news: Ole Gunnar Solskjaer concedes Manchester United were flattered by victory

The bid now requires Lampert to deposit $120 million by 4 p.m. Wednesday through his ESL hedge fund.

It's not the first frenzied deal Sears has made during its bankruptcy.

Sears Holdings Corp shares more than doubled after news emerged that Lampert would have another chance to rescue Sears from liquidation.

Lampert will be able to use debt he controls as part of his bid, a process known as "credit bidding", Schrock said.

"I remember at the beginning of summer, we'd start flipping through the catalog, having to get the penny loafers of the Mary Janes, the black and white shoes", she said.

"If Lampert's deal doesn't pay enough cash to pay their fees, they would have concerns", said bankruptcy attorney Kenneth Rosen of Lowenstein Sandler, who represents smaller creditors.

Unsecured creditors have pushed for Sears to liquidate, partially because they contend they will realize a better financial recovery if it does.