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Sears’ CEO Buys Company Assets in Bankruptcy Auction

Law Office of Ronald V. De Caprio June 18, 2019

In a recent post about the status of the Sears bankruptcy, the efforts by the company’s CEO Eddie Lampert to secure financing for a purchase of the company’s assets received significant attention. The other shoe has apparently fallen, because recent reports from the bankruptcy that occurred on Jan. 14 indicate that Lampert’s hedge fund ESL Investments has submitted a revamped bid for most of the company’s stores and assets. The bid must still receive approval from the bankruptcy court in White Plains, N.Y., but Lampert appears to be the clear front-runner in efforts to feast on what is left of the formerly giant retailer.

According to a post in the Wall Street Journal, Lampert had round-the-clock negotiations over several days with lenders and a committee for the company about the details of a revised plan to purchase the assets. Lampert’s proposal was reported to be about $5 billion, together with assumption of vendor claims and tax obligations. Also, Lampert agreed to make a $17.9 million deposit on the sale that was non-refundable.

The only other bidder was Abacus Advisory Group, LLC, which would have resulted in the closing of all of Sears’ remaining retail locations. During the course of Lampert’s negotiations, a number of creditors filed notices that they opposed the Lampert bid and that they would be better served by the complete liquidation of the company.

After the results of the auction were announced, a spokesperson for ESL Investments declared that its proposal “provides substantially value to shareholders” than would occur in a liquidation. The spokesperson also made prominent mention of the 50,000 jobs that will be saved by its actions. Some skeptics of the transaction see it only as a way for Lampert to buy Sears at a very sharp discount. Time will tell whether the skeptics or the ESL spokesperson are correct.