AP

Sears staves off liquidation, stores to remain open

Jan 16, 2019, 7:35 AM

FILE- In this Tuesday, Jan. 1, 2019, file photo, an empty shopping cart sits outside a Sears store ...

FILE- In this Tuesday, Jan. 1, 2019, file photo, an empty shopping cart sits outside a Sears store in the Streets of Southglenn mall in Littleton, Colo. As Sears teeters on the brink of collapse, there’s one man at the center of the fight for the future of the iconic retailer. Eddie Lampert plays several, often conflicting, roles in what could be the final chapter for the company that began as a mail order watch business 132 years ago. He’s been chairman, CEO, landlord, lender, and largest shareholder all at the same time. If the company survives, he wins. If it ends up liquidating, he also wins. (AP Photo/David Zalubowski, File)

(AP Photo/David Zalubowski, File)

NEW YORK (AP) — Sears will live on— at least for now.

The company’s chairman and largest shareholder and chairman, Eddie Lampert, won a bankruptcy auction for Sears in New York, averting liquidation of the iconic chain, according to a source familiar with the negotiations. The person agreed to speak on condition of anonymity because they were not authorized to discuss the negotiation publicly.

Lampert was the only one to put forth a proposal to rescue the floundering company in its entirety. He had sweetened his bid multiple times to more than $5 billion over the last few days through an affiliate of his hedge fund ESL. Details of the final terms couldn’t be learned.

Lampert, who steered the company into bankruptcy protection, may be able to keep the roughly 400 remaining Sears stores open, which would mean tens of thousands of jobs are saved, at least for now.

Whether Sears, founded 132 years ago as a mail order watch business, can survive in the era of Amazon remains questionable.
Sears filed for Chapter 11 bankruptcy protection in October. At that time, it had 687 stores and 68,000 workers. At its peak in 2012, its stores numbered 4,000.

Lampert says there’s still potential for the company even as it struggles to compete not only with Amazon but Walmart, Target and dollar stores that have carved out their own niche.

“While there’s no doubt that a shrunken Sears will be more viable than the larger entity, which struggled to turn a profit, we remain extremely pessimistic about the chain’s future,” said Neil Saunders, managing director of GlobalData Retail. “In our view, Sears exits this process with almost as many problems as it had when it entered bankruptcy protection. In essence, its hand has not changed, and the cards it holds are not winning ones.”

Under Lampert, Sears has survived by spinning off stores and selling brands that had grown synonymous with the company, like Craftsman. Lampert has loaned out his own money and cobbled together deals to keep the company afloat, though critics said he has done so with the aim of benefiting his ESL hedge fund. ESL has maintained that the moves put much-needed cash into the business.

Lampert personally owns 31 percent of the Sears’ outstanding shares and his hedge fund has an 18.5 percent stake, according to FactSet.

Four years ago the company created a real estate investment trust to extract revenue from the enormous number of properties owned by Sears. It sold and leased back more than 200 properties to the REIT, in which Lampert is a significant stakeholder.

He stands to realize a big tax gain keeping Sears alive, using the company’s years of net operating losses to offset future taxable income if one of his other companies takes over the chain, says David Tawil, president and co-founder of Maglan Capital, which follows distressed companies.

Tawil and others believe Lampert wants to be in full control of liquidating Sears’ assets, including real estate.

Lampert combined Sears with Kmart in 2005, about two years after he helped bring Kmart out of bankruptcy. He pledged to return Sears to greatness, but that never happened.

The company, hammered during the recession and outmatched in its aftermath by shifting consumer trends and strong rivals, hasn’t had a profitable year since 2010 and has suffered 11 straight years of annual sales declines. Lampert has been criticized for not investing in the stores, which remain shabby.

We want to hear from you.

Have a story idea or tip? Send it to the KSL NewsRadio team here.

AP

FILE - Hannah Gutierrez-Reed, the former armorer for the Western film "Rust," listens to closing ar...

MORGAN LEE Associated Press

Movie armorer seeks dismissal of her conviction or new trial in fatal shooting by Alec Baldwin

'Rust' armorer seeks to dismiss her involuntary manslaughter conviction or convene a new trial after dismissal of Alec Baldwin's case.

5 days ago

Republican presidential candidate former President Donald Trump is covered by U.S. Secret Service a...

JULIE CARR SMYTH, JILL COLVIN, COLLEEN LONG, MICHAEL BALSAMO, ERIC TUCKER and MICHELLE L. PRICE Associated Press

Local officer encountered gunman just before he shot toward Trump at rally, sources tell AP

One local police officer climbed to the roof and encountered the shooter, who pointed his rifle at the officer, AP sources say.

8 days ago

FILE - In this combination of photos, President Joe Biden speaks on Aug. 10, 2023, in Salt Lake Cit...

Associated Press

Debate takeaways: Trump confident, even when wrong, Biden halting, even with facts on his side

Thursday’s presidential debate was a re-run that featured two candidates with a combined age of 159, but it went poorly for one of them.

24 days ago

Supreme Court Police officers stand on duty outside of the Supreme Court building on Thursday, June...

MARK SHERMAN, Associated Press

The Supreme Court upholds a gun control law intended to protect domestic violence victims

The Supreme Court has upheld a federal gun control law on Friday with intentions to protect domestic violence victims.

1 month ago

A photo taken of Matthew Perry in 2022....

Clayre Scott

Criminal investigation opened in relation to Matthew Perry’s death

A criminal investigation has been opened in relation to Matthew Perry's death due to high levels of ketamine found in his blood.

2 months ago

FILE - The United Nations (UN) headquarters are pictured in Geneva, Switzerland, Friday, Sept. 9, 2...

EDITH M. LEDERER, Associated Press

U.N. to vote on resolution that would grant Palestine new rights

The U.N. General Assembly is expected to vote Friday on a resolution that would grant new "rights and privileges" to Palestine.

2 months ago

Sponsored Articles

A young woman smiles while reading the menu at a lakeside restaurant, enjoying the panoramic view o...

Bear Lake Convention & Visitors Bureau

The best restaurants to try in Bear Lake

Save this guide to the best restaurants in Bear Lake when you need to find a place to dine during your next visit.

Female leg stepping on weigh scales. Healthy lifestyle, food and sport concept....

Health Utah

Sustainable weight loss: the science-backed way to achieve it

Learn more about Debbie's weight loss journey with Health Utah, who have a unique weight loss philosophy for success.

Underwater shot of the fisherman holding the fish...

Bear Lake Convention and Visitors Bureau

Your Bear Lake fishing guide

Bear Lake offers year-round fishing opportunities. By preparing ahead of time, you might go home with a big catch!

A group of people cut a purple ribbon...

Comcast

Comcast announces major fiber network expansion in Utah

Comcast's commitment to delivering extensive coverage signifies a monumental leap toward a digitally empowered future for Utahns.

a doctor putting her hand on the chest of her patient...

Intermountain Health

Intermountain nurse-midwives launch new gynecology access clinic

An access clinic launched by Intermountain nurse-midwives provides women with comprehensive gynecology care.

Young couple hugging while a realtor in a suit hands them keys in a new home...

Utah Association of Realtors

Buying a home this spring? Avoid these 5 costly pitfalls

By avoiding these pitfalls when buying a home this spring, you can ensure your investment will be long-lasting and secure.

Sears staves off liquidation, stores to remain open