Sears avoids liquidation at bankruptcy auction

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Sears avoids liquidation at bankruptcy auction

01/16/2019
Sears still has a pulse, having avoided liquidation at its bankruptcy auction.

The embattled retailer reached a roughly $5 billion deal on Wednesday with chairman Eddie Lampert for a takeover bid via his ESL Investments hedge fund that would keep the company, including about 400 stores, in operation, reported CNBC, citing people familiar with the matter.

The deal came after days of negotiations and concerns about the bid’s ability to cover Sears’ administrative expenses, including vendor payments and advisory fees. The offer relies on a $1.3 billion so-called credit bid — funding the deal in part by forgiving debt owed to ESL.

From late Tuesday night until 2 a.m. Wednesday morning, Sears, ESL and their advisors struggled to figure out a solution. Ultimately, ESL moved its offer up by roughly $150 million, including taking on more liabilities, CNBC said.

Obstacles remain for Lampert and Sears going forward. Sears’ unsecured creditors are not on board with Lampert’s bid, the report said, and if they formally object to the bid, the bankruptcy judge will need to assess the merits of their claim on Jan. 31. Lampert needs the judge’s approval for the bid to be official.

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