Published: Sun, February 10, 2019
Economy | By

Sears bankruptcy: Court okays Eddie Lampert's bid to keep running Sears

Sears bankruptcy: Court okays Eddie Lampert's bid to keep running Sears

Judge Robert Drain of United States Bankruptcy Court for the Southern District of NY approved the plan developed by Sears chairman and former CEO Lampert, the newspaper reported.

Lampert's fund, ESL Investments, intends to keep 425 Sears and Kmart stores open, saving the jobs of 45,000 employees - a move that Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of NY described as credible.

Drain's decision capped three days of hearings.

The judge's decision saves Sears from liquidation, but still unanswered is whether Lampert can reinvigorate a retail chain that many consumers have fond memories of, but no current relationship with.

Schrock argued that the proposal to liquidate would not raise more money than a sale, as claimed by the creditors.

"A clear communications process with vendors and employees is really warranted", Drain said.

He also asked Drain to consider the plight of the Sears employees. Recently, PBGC said they are now 64 percent funded-making it Sears' largest unsecured creditor.

"Liquidation can be the better option", he said.

A plan to keep Sears Holdings Corp. alive and tens of thousands of people employed was approved Thursday by a federal Bankruptcy Court judge. It also took over assets in the plan.

The most serious issue left to be decided is how much of the $166 million in accounts payable Lampert and his hedge fund ESL are willing to assume. Attorneys for the creditors suggested without an agreement on the issue the deal should not be allowed to close.

In his hour-long ruling, Drain said he determined the sale "makes good business sense" and rejected the committee's arguments that the sale process was flawed or that liquidation would result in a better and higher transaction. A Sears executive said during the hearing that the company wasn't sure how many stores it would sell in meeting those financial goals.

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. And the company's business plans, filed with the bankruptcy court, suggest that future store closings and real estate sales could be on the horizon.

"We believe in the potential to create a successful, multi-faceted, 21st century company that can benefit from the changes in today's retail environment", said a statement from his hedge fund earlier this month.

When Lampert combined Sears and rival chain Kmart, the merged retailer had almost 3,500 stores and employed more than 300,000 people, a work force that shrank to 68,000 when it filed for bankruptcy.

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