Sears to ask bankruptcy judge to liquidate
today Jan 8, 2019
Sears Holdings Corp will ask a bankruptcy judge on Tuesday if it can proceed with liquidation after it could not reach an agreement on Chairman Edward Lampert's $4.4 billion (£3.4 billion) takeover bid, casting doubt on the survival of the 126-year-old U.S. department store, people familiar with the matter said.
Should Sears liquidate its assets, it would become perhaps the most high-profile victim in the wave of bankruptcies that have swept the retail sector in the last few years, as the popularity of online shopping exacerbates the fierce price competition facing brick-and-mortar stores.
Sears, which filed for bankruptcy protection last October, may have to close hundreds of stores it is still operating, potentially putting up to 68,000 people out of work, the sources said. Its vast inventories of tools, appliances and store fixtures will be sold in fire sales, the sources added.
Now, the retailer’s approximately 68,000 workers are pushing Lampert to set up a financial fund giving laid-off workers a week of pay for every year of service.
"If he (Eddie Lampert) can drum up the money for another takeover bid, he can find the resources to come up with a hardship fund,” said Onie Patrick, a laid-off Kmart employee who is part of the organising effort.
Lawyers for Lampert and his hedge fund, ESL Investments Inc, plan to present details of his offer and make the case for renewing efforts to save Sears, the sources said.
A Sears spokesman declined to comment.
The fight for a hardship fund has become the new normal in U.S. retail, signalling a growing push for severance pay and benefits in an industry that has witnessed a raft of store closures and bankruptcies.
U.S. Bankruptcy Judge Robert Drain in the Southern District of New York, who is presiding over the case, could decide to give Lampert more time to improve on his bid, the sources said. A bankruptcy auction for Sears' assets is not due until Jan. 14.
The sources asked not to be identified because the matter is confidential. Representatives for Sears and Lampert offered no immediate comment.
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