Sources told Reuters the company's board will ask a bankruptcy judge on Tuesday for permission to liquidate, closing all of its hundreds of remaining stores and selling off all its assets across the country. Transform Holdco, a new entity controlled by ESL, said in a letter to Sears' investment banker that it believes keeping the Hoffman Estates-based retailer in business is the best way to preserve jobs and recover money the retailer owes. The 126-year-old company, whose closure would be among the most high-profile retail bankruptcies in recent years, struggled to convince suppliers to keep shipping it merchandise by touting the $300 million in financing it has secured in November so that its business could operate through the holidays.
A main point of contention in the negotiations between Lampert and Sears previously centered on whether Lampert's bid fully addressed the bankruptcy costs that Sears has racked up, according to sources familiar with the matter.
Former Sears CEO Eddie Lampert, through a hedge fund he controls, attempted to rescue the venerable retailer, bidding $4.4 billion for the firm, which declared bankruptcy in October.
Lampert's is the only bid created to keep Sears open.
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.
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The revised bid is not official, and will be evaluated in an auction set for January 14 that will compete with other bids from liquidators looking to shut it down. It is known he expects the new Sears to borrow $1.3 billion from three leading banks.
Lampert's lawyers were in court to argue his offer was the only way to keep Sears in business.
He also offered to forgive more than $1 billion in debt he is owed by Sears from earlier loans he made to the company.
"If Lampert's deal doesn't pay enough cash to pay their fees, they would have concerns", said bankruptcy attorney Kenneth Rosen of Lowenstein Sandler, who represents smaller creditors.
Lampert's offer did not include putting up cash to back the credit bid. It also sought a release from any liability related to transactions between the hedge fund and the retailer prior to Sears' bankruptcy filing.