Bankruptcy judge gives Sears another chance

The company’s corporate parent had 687 stores and 68,000 employees before filing for bankruptcy

A bankruptcy judge has blessed a $5.2 billion plan by Sears chairman and biggest shareholder to keep the iconic business going.

The approval means roughly 425 stores and 45,000 jobs will be preserved.

Eddie Lampert’s bid through an affiliate of his ESL hedge fund overcame opposition from a group of unsecured creditors, including mall owners and suppliers, that tried to block the sale and pushed hard for liquidation.

In delivering his decision Thursday, U.S. Bankruptcy Judge Robert Drain for the Southern District of New York rejected the committee’s claims that the sale process was unfair and flawed, that it shut out any other parties who could have been interested in buying the business and that Sears had more value to its creditors if it died than if it lived.

Lawyers for Sears and ESL argued that the sale offered the best deal and also preserved jobs.

Drain is expected to enter his order on Friday, making it official.

Even with this latest reprieve, Sears’ long-term survival remains an open question. Lampert hasn’t put forth any specific reinvention plans and the company still faces cutthroat competition from Amazon, Target and Walmart. Meanwhile, its stores look old and drab.

Lampert steered Sears into Chapter 11 bankruptcy protection in October. The company’s corporate parent, which also owns Kmart, had 687 stores and 68,000 employees at the time of the filing. At its peak in 2012, its stores numbered 4,000.

Sears was hard hit during the recession and outmatched in its aftermath by shifting consumer trends and strong rivals. It hasn’t had a profitable year since 2010 and has suffered 11 straight years of declining sales.

Lampert’s original plan had been rejected by a subcommittee of the Sears board. ESL sweetened the bid several times before the subcommittee gave it the OK.

A group of unsecured creditors, who rank at the bottom of the list to be paid, filed objections to the sale, alleging falsified financial projections, excessive buybacks, and a spinoff of key brands that stripped the business of key assets.

“The tortured story of Sears reads like a Shakespearean tragedy,” the group said. “Lampert and ESL managed Sears as if it were a private portfolio company that existed solely to provide the greatest returns on their investment, recklessly disregarding the damage to Sears, its employees and its creditors.”

Lampert personally owns 31 per cent of the Sears’ outstanding stock, and his hedge fund has an 18.5 per cent stake, according to FactSet. He stepped down as CEO in October after serving in that role since 2013.

Under Lampert’s watch, Sears has survived in part by spinning off stores and selling well-known brands like Craftsman tools. He has also lent some of his own money.

Lampert has been criticized for not investing in his stores. Even Senator Elizabeth Warren, a Massachusetts Democrat and potential presidential candidate, has attacked him and questioned his commitment to Sears workers.

“I am concerned that under your leadership, Sears may continue to struggle and employees will continue to face uncertainty and anxiety over their future employment, and ongoing risks to their benefits and economic security,” Warren wrote in a letter to Lampert made available to The Associated Press by a worker advocacy group.

One of the lawyers for Lampert’s hedge fund testified earlier this week that the 56-year-old billionaire has been portrayed as a cross between J.Gould, the late railroad tycoon, and Barney Fife, a fictional character in the popular TV show “The Andy Griffin Show.”

Drain, the bankruptcy judge, acknowledged that Lampert had been subject to “verbal abuse.”

“He is a wealthy individual and a big boy,” Drain said. “And I guess he can take it.”

But he added that Lampert “has an opportunity to not be a cartoon character.”

Anne D’Innocenzio, The Associated Press

Like us on Facebook and follow us on Twitter.

Just Posted

Judge orders credit union’s bank records for Kelowna social worker facing theft allegations

The man is accused of negligence, breach of contract, fraud and a conspiracy with Interior Savings

Design submitted for new restaurant at location of former Kelowna hot-spot Rose’s Pub

Cactus Restaurants purchased the property earlier this year

Cancer cure breakthrough needs more research

Dr. Connie Eaves, a leading biotech research scientist in Canada, was keynote speaker at cancer care forum held Friday in Kelowna

Kelowna man sentenced to 20 months for having sex with minor

The incidents occurred over a four-month period between February and May of 2018

Well-known Kelowna developer, Al Stober, dies

Al Stober, whose Landmark Centre development spawned new town centre in the city, passes away at 88.

Kelowna business sponsors BC SPCA gala

Orthoquest Pedorthics and Rehabilitation returns as one of the gala sponsors for 2019

Summerland holds multiple events to launch festive season

Festival of Lights, Light Up the Vines and Sip ’n’ Shop will be held in late November and December

PET OF THE WEEK: Moose still needs a home

Critteraid cat wants a nice, quiet environment

Jack’s Devils beat Quinn’s Canucks 1-0 in NHL brother battle

New Jersey youngster scores first career goal against Vancouver

Penticton Vees to host 2021 Centennial Cup

It’s the first time Penticton has hosted the tournament which decides the country’s Junior A champions

VIDEO: Meet your Kelowna-Lake Country candidates

All seven Kelowna-Lake Country candidates answer questions about themselves and their policy

VIDEO: Meet your Central Okanagan-Similkameen-Nicola candidates

Central Okanagan-Similkameen-Nicola candidates answer questions about themselves and their policy

Two charged after owner’s wild ride through Kamloops in his stolen truck

Crystal Rae Dorrington, 37, and Derrick Ronald Pearson, 32, facing multiple charges

Leaders pour it on with rallies, boosts for candidates as campaign reaches peak

The federal election campaign has reached a crescendo

Most Read