Sears survives as judge approves sale to chairman

Decision is, for now, a lifeline for 425 stores, 45,000 employees

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By Bob Uphues

Editor

Sears remains alive as a company, at least for now, after a U.S. Bankruptcy Court judge in New York on Feb. 7 approved the sale of the company's assets, which include some 425 Sears and Kmart stores, to a firm affiliated with Sears Chairman Eddie Lampert's hedge fund, ESL Investments.

Despite strong protests from a committee of creditors, who argued the company had no future under Lampert's leadership, and a last-minute salvo from U.S. Senator Elizabeth Warren, Judge Robert Drain appears to have had the company's roughly 45,000 employees in mind when he made his decision to accept Lampert's $5.2 billion bid.

"You haven't analyzed how many of those people live week to week on their salary – or you don't care," Drain reportedly told an attorney representing creditors who favored liquidating the company, according to a report by CNBC.

Warren, who has announced her candidacy for president of the United States in 2020, sent a letter to Lampert on Jan. 30 demanding answers to questions of how the chairman intends to keep Sears afloat after guiding it to its present state.

"As chairman of Sears for 14 years, you have made more than a billion dollars off of the company while burying it in debt, closing stores and firing hundreds of thousands of workers," Warren wrote. "As chairman, you made a series of decisions that benefited you, your hedge fund and other investor's short-term profits at the expense of the company's long-term success and its workers."

Earlier in January, the committee of creditors charged that Sears' position "was precipitated by years of misconduct by Lampert, ESL and others against its creditors."

But ESL Investments argued in a court filing that the company had done its due diligence in making its bid offer and improved that offer to meet the demands of Sears Holdings.

The new company under Lampert's direction would be able to meet its debts and still own valuable brands such as Kenmore, Die Hard and others. The company would also benefit going forward by operating fewer and smaller stores, ESL's court filing maintained.

ESL also complained about the committee of creditors' "ceaseless attempts to stop the proposed sale at any cost" and calling their criticism of Lampert's bid "self-serving bombast."

While Judge Drain recognized the "verbal abuse" Lampert endured, according to CNBC, and ultimately went with Lampert's bid for Sears' assets, Drain remarked that Lampert "has the opportunity not to be a cartoon character … he should do that."

What that means, for now, is that the Sears store at North Riverside Park Mall will remain open in its present, downsized form in the upper floor of the north anchor space at 7501 Cermak Road.

The store reduced its size by half at the end of 2017 in order to pave the way for Round One, a family entertainment/amusement complex that occupies half of the anchor space's lower level.

The anchor property is owned by Seritage Growth Properties, a real estate investment trust that Sears Holdings created in 2015 to buy 250 Sears and Kmart locations. The goal was to close or downsize the stores at those locations and lease space to new, higher-paying tenants.

Lampert is also chairman of Seritage.

 

 

Contact:
Email: buphues@wjinc.com Twitter: @RBLandmark

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