Sears aims liquidation as its bid fizzles out

Bloomberg

Sears Holdings Corp is preparing for the potential that this year will be its last.
The storied retailer started laying the groundwork for a liquidation after Chairman Eddie Lampert’s bid to buy several hundred stores out of bankruptcy fell short of bankers’ qualifications, people with knowledge of the matter said.
Sears representatives summoned liquidation firms and other advisers to emergency meetings after rejecting Lampert’s $4.4 billion bid to buy and operate Sears stores, said the people, who asked not to be identified because the discussions were private. Sears would now focus on preparing for liquidation sales to begin as early as mid-month, they said.
If the 125-year-old retailer does die in bankruptcy — like Toys ‘R’ Us in 2018, and Borders Group Inc in 2011 — it would mark the largest fatality yet in the retail apocalypse prompted by a shift to online shopping and other changing spending patterns. Lampert could rally yet with an improved bid before a status hearing on Tuesday.
He also has a back-up plan in which ESL would pursue the purchase of some of Sears’s parts, including real estate and some of its brands.
Spokesmen for Sears and ESL declined to comment, as did a representative for Lazard Freres & Co, which is advising Sears.
The retailer, which includes its namesake department-stores and the Kmart chain, entered Chapter 11 protection in October with $11.34 billion in debt and a warning that it risked being relegated to the “dustbin of history” with 68,000 jobs at stake.
Its filing marked the second-largest retail bankruptcy ever, according to Bloomberg Data — just after that of real-estate specialist Capmark Financial Group Inc, with $21 billion in liabilities. The third largest, Toys ‘R’ Us, had around $8 billion in debt. Its attempt to reorganise through bankruptcy failed.
Sears has pushed forward with the hope that it could restructure with a smaller group of more profitable stores. The bid Lampert submitted in late December intended to keep
425 stores open, while preserving up to 50,000 jobs.
But representatives for the company — along with creditors and other parties — found a number of shortcomings, people with knowledge of the discussions said. Gaps remained in some of the financing and the plan wouldn’t have provided enough cash to cover costs incurred in the bankruptcy.