Monday, 17 June, 2019

Sears to Liquidate After Takeover Bid Falls Through

Sears to ask bankruptcy judge to liquidate Modal Trigger Getty Images
Ginger Lawrence | 08 January, 2019, 21:25

The iconic retailer is expected to announce its liquidation plans this morning to a NY bankruptcy judge after a bid from the company's chairman to save it fell through.

Retail expert Burt Flickinger discusses how Sears Chairman Eddie Lampert is trying to buy the company out of bankruptcy.

As CCN reported, The 126-year-old retailer had hoped to receive approval from a bankruptcy judge to proceed with liquidation after advisers rejected a $4.4 billion takeover bid from Lampert and ESL.

Still, ESL plans to protest Sears' decision, a person familiar with the situation told CNBC.

If Lampert succeeds in his attempt to rescue Sears from liquidation, it could save as many as 55,000 jobs - temporarily, anyway, as the firm has closed around 40 percent of its stores in the three months since filing for bankruptcy protection in October.

The people requested anonymity because the information is confidential.

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A liquidation could still salvage pieces of the storied retailer, like its home services business.

"The bankruptcy process is burning through a lot of money and these assets are more valuable today rather than tomorrow", said a source close to the creditors.

It could be officially the end of the road for Sears. Its fall from grace saw it swing from being the "first everything store" to a business that couldn't compete when "everything" was found online after Amazon arrived. The combined companies became victim of savvier competition, changing shopping habits and, many have argued, poor management. As Sears' losses piled up, it didn't have a choice, it couldn't invest.

One of the biggest sticking points is ESL's plan to pay for part of the deal by forgiving $1.3 billion in debt that Sears owes the hedge fund, which includes fees owed on stores sold to Seritage Growth Properties.

Sears did not return calls for comment, and ESL declined to comment.