Bankruptcy judge says he will approve Lampert purchase of Sears
A customer enters a Sears department store in Riverside, Illinois, USA, Dec 28, 2018 (reissued Jan 8, 2019). EPA-EFE FILE/TANNEN MAURY
A Sears department store in Saugus, Massachusetts, USA Jan 9, 2019. EPA-EFE/CJ GUNTHER
Bangkok Desk, Feb 8 (efe-epa).- A bankruptcy judge said Thursday he would approve Edward Lampert's bid to purchase SearsHoldings Corp., a decision that will keep the doors open at more than 400 stores and see 45,000 people keep their jobs, Dow Jones Newswires reported in an article made available to Efe.
Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., said he would sign off on Mr. Lampert's $5.2 billion offer to purchase the retailer despite opposition from a number of the company's creditors, including its big landlords. Lawyers for those creditors had spent the past several days poking holes in Mr. Lampert's bid and arguing he would have trouble keeping the company afloat even if the sale was approved.
But Judge Drain in court Thursday said the Sears chairman and his hedge fund, ESL Investments, have a credible plan to keep 425 stores open immediately, and that the sale marks an opportunity for Sears to better communicate with its vendors and employees.
Mr. Lampert, who combined Sears and rival Kmart in 2005 and recently served as the company's chief executive before leaving that role as part of the bankruptcy filing, has fought since the outset of the bankruptcy to keep control of Sears.
"During the course of this case, Mr. Lampert, particularly, and ESL, generally, have been the subject to substantial verbal abuse," Judge Drain said at the end of Thursday's hearing. "He is a wealthy individual and a big boy, and I guess he can take it."
The billionaire hedge-fund manager emerged with control of Sears after a dayslong auction last month. By sweetening his bid at the last minute, he was able to trump a plan by some creditors to liquidate the unprofitable company and close all its remaining stores.
His bid for Sears got a boost Thursday when the company's bankruptcy lawyer to the court said that the Pension Benefit Guaranty Corp. had resolved its $1.7 billion claim against the company and would back Mr. Lampert's proposal to buy hundreds of stores out of bankruptcy. The government pension insurer, which was Sears's largest unsecured creditor, is taking over the company's underfunded pension plans.
Although Mr. Lampert emerges from Sears's bankruptcy with the remains of his retail empire intact, the hedge-fund manager still faces creditors' lawsuits regarding past transactions he oversaw at the company, including the spinoffs of Sears's Lands' End business and some of the retailer's best properties to real-estate investment trust Seritage Growth Properties.
Sears's creditors claim Mr. Lampert and ESL deployed a dizzying series of stock buybacks, spinoffs and dividends to rake in billions of dollars while stripping the 126-year-old company of assets and cash.
Mr. Lampert has repeatedly denied accusations that he steered Sears into ruin for his own benefit. When he made money selling off the company's real estate and businesses, so did other shareholders, he has said.
Mr. Lampert, who is also Sears's largest creditor and biggest shareholder, will own all its real estate and hold on to the Kenmore and DieHard brands.
What remains to be seen is whether Mr. Lampert's victory is also a victory for Sears itself. The deal will keep open hundreds of stores and preserve jobs, but the company has left open the possibility that it may need to close more stores and cut more jobs in the future.
More broadly, a postbankruptcy Sears must learn to navigate a rapidly changing industry that it once dominated. The department store chain continues to lose money and lacks the scale to compete effectively with Amazon.com Inc. and Walmart Inc., analysts and executives say.
Some retailers, such as Mattress Firm Inc. and Payless ShoeSource Inc., have emerged from bankruptcy after shedding debt and shutting hundreds of stores. Others, such as Toys "R" Us and RadioShack, have disappeared. Still others, including Gymboree Group Inc. and Wet Seal Inc., emerged only to wind up back under court protection.
"The judge was swayed by the 'save jobs' argument," said Erik Gordon, a professor at the University of Michigan's Ross School of Business. "But I think the judge is as unrealistically hopeful as Eddie Lampert. Usually a new management team is brought in [after a bankruptcy], but this has been Eddie for years and it's still going to be Eddie after this."
By Lillian Rizzo