Sears Holdings is reportedly preparing for liquidation after a $4.4 billion bid from Chairman Eddie Lampert fell short of banker's qualifications, according to anonymous sources cited in multiple media outlets.
Negotiations to identify qualifying bids stretched much further than the board's 4 p.m. Friday deadline, and Lampert still has until a Tuesday court date to address issues with his bid, sources told Reuters. If the bid is still unsuccessful, Abacus Advisory Group, which has liquidated more than 800 Sears stores, is the front-runner to sell off the chain's tools, appliances and store fixtures, the sources also said. The company is also considering working with a firm run by American Eagle CEO Jay Schottenstein to shed inventory, according to those sources.
A Sears Holdings spokesperson declined to comment to Retail Dive regarding the negotiations. In an SEC filing submitted minutes after the Friday deadline, the company announced the departure of 26-year Sears veteran Dean Schwartz, who was the president of the company's hardlines operations.
Sears is careening toward liquidation, but that still hasn't detracted Lampert's last-minute tweaks to a bid that would keep him in control of the 126-year-old retailer's fate. But creditors have criticized his bid to save 425 stores and preserve 50,000 jobs ever since he proposed the idea late last year through his hedge fund, ESL Investments. Even workers' rights activists have expressed their skepticism that Lampert would make good on his promise to keep the business going and provide severance pay.
"The problem is, he owes a lot of people money in the bankruptcy process," Carrie Gleason, policy director and campaign manager for Organization United for Respect and its Rise Up Retail campaign, told Retail Dive last week after Lampert submitted two plans for the business. "And he already didn't protect severance pay for these families."
Roughly 68,000 Sears workers would be out of a job if the company ultimately liquidates. Sears filed for bankruptcy in October of 2018 and decided not to select a lead bidder for the company in hopes that bidders aside from ESL would emerge.
At this point, liquidation may be the best option for creditors looking to make sure they get paid. One of the main sticking points of Lampert's bid, anonymous sources told Reuters, is over administrative claims, or over $200 million in bills from lawyers and financial advisers. Those costs may be addressed among the last-minute adjustments to the bid, the sources said. Another court date is scheduled for Tuesday, when the company is expected to publicly disclose whether the liquidation process will begin.