Eddie Lampert's deal to buy Sears granted approval, as retailer is given a second life...
Edward Lampert speaks during a news conference to announce the merger of Kmart and Sears in New York Wednesday, Nov. 17, 2004. Gregory Bull | AP Edward Lampert speaks during a news conference to announce the merger of Kmart and Sears in New York Wednesday, Nov. 17, 2004. Sears was granted a new lifeline on Thursday as its sale to Chairman Eddie Lampert, through an affiliate of his hedge fund ESL Investments, was approved by Judge Robert Drain.
ESL has said the $5.2 billion deal to buy the company will save 425 stores and roughly 45,000 jobs. Drain said on Thursday he expects to enter the order on Friday, thereby making it official.
Sears filed for bankruptcy in October, and Lampert's bid had been the only option that could have saved it. The deal though, has been protested by its unsecured creditors, which have lambasted the deal as a "scheme to rob Sears and its creditors of assets." They have accused Lampert of using his unique position as Sears' longtime chairman, CEO and largest shareholder to orchestrate deals that unduly benefited him.
In a trial that spanned three days and two courtrooms within the White Plains, New York courthouse, Drain overheard a litany of concerns from Sears' unsecured creditors, who pointed to potential flaws in ESL's business plan and its previous failures running the retail giant. It attacked the bankruptcy sale that Sears ran as it looked for a buyer and argued that ESL's bid was deficient.
Unsecured creditors also hammered home the uncertainty over Sears' future and applied skepticism to the rigor with which it put together its business plan. Sears has yet to hire a number of key executives for the new company, including its CEO – a role Lampert held until he stepped down when Sears' filed for bankruptcy. ESL has an optimistic and profitable view of Sears' future, despite it not having turned a profit since 2010.
"I do recall us missing our plan for every year were I was the board," conceded Kunal Kamlani, president of ESL, who has served on the board since March 2016.
Kamlani outlined the vision the company has for its resurgence, echoing papers ESL filed with the bankruptcy court last week. It plans to build out smaller stores focused on selling its most popular products like appliances and mattresses. It also expects to operate more profitably by only running 425 of its profitable stores, rather than its roughly 700 stores it was running when it filed for bankruptcy in October.
When Drain inquired whether a smaller footprint also meant for decreased operating clout with suppliers, Sears' Chief Financial Officer Rob Riecker said he believed a smaller scale will help the company "optimize" its inventory, rather than "starving" its unprofitable stores.
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