Sears reportedly wants to liquidate, rejecting investor’s bid

Sears, one of the nation’s oldest retailers, is reportedly calling it quits. The 126-year-old retailer on Tuesday was set to ask a bankruptcy court’s permission to proceed with a planned liquidation after rejecting a $4.4 billion takeover bid from majority investor and Chairman Eddie Lampert, according to multiple media reports.

Sears Holdings filed for bankruptcy protection last October. A liquidation would likely shut hundreds of Sears and Kmart stores, potentially putting more than 50,000 people out of work.

How Sears went from innovation to bankruptcy

Lawyers for Lampert and his hedge fund, ESL Investments, were pressing for more time to sweeten his offer. An auction to sell Sears Holdings’ remaining assets is scheduled for Jan. 14.

Sears declined comment Tuesday in an email to CBS MoneyWatch.

The company in late December said it would close 80 Sears and Kmart locations in late March, adding to the previously announced shutdown of 40 unprofitable stores next month. The once-dominant retailer has about 500 stores still in operation.

Tuesday’s court hearing in the Southern District of New York comes a day after the retailer took to social media to dispel the notion it was not longer in the running, saying in a tweet: “We may be slowing down, but we are not out of the race just yet.”

in making his bid for what remains of Sears, former CEO and billionaire investor Lampert stipulated any deal would put him and ESL ahead of other creditors down the line, and would be financed with more debt than cash. 

“ESL is the largest creditor of Sears, and their offer includes a credit bid of $1.8 billion of the debt they hold — that’s something that might be problematic going forward,” Sarah Foss, a legal analyst at Debtwire told CBS MoneyWatch in December.

The demise of the Big Store 
Lampert in 2002 bought Kmart debt as the discount retailer entered Chapter 11 bankruptcy protection, and at the same time purchased Sears shares. In 2004, Kmart said it would acquire Sears for $11 billion. By 2016 the combined retail venture Sears Holdings was locked in a downward spiral of falling revenue and rising debt, with customers defecting from stores considered outdated and stocked with unappealing merchandise.  

Lampert touted his merger of Kmart and Sears as laying the groundwork for their revival, a scenario that did not work out, and had the hedge fund manager relinquishing his role as CEO just after Sears filed for bankruptcy protection last fall. Lampert, who retains the title of chairman, and his ESL own just under half of the Hoffman Estates, Illinois, company, according to FactSet.

While current Sears shareholders have lost almost all their investment and creditors that include the U.S. government are owed $11 billion, Lampert has pocketed nearly $1.4 billion to date from his investment in the retailer, calculated Institutional Investor in a recent story. 

In a regulatory filing, Sears announced the departure of one of its top executives. Perry Dean Schwartz resigned as president of the company’s hardlines division effective on Friday.