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Sweetened Auction Bid Accepted For Operational Sears

Wednesday, January 16, 2019   (0 Comments)

January, 16, 2019

 

Auction bids were submitted earlier this week. With Eddie Lampert’s hard deposit of $120M and a sweetened bid which has concessions to employees, he won approval early Wednesday from debtor Sears. Eddie Lampert's ESL Investments made an offer to keep Sears Holdings Corp. in business, outlining a $5.3 billion plan to buy the retailer out of bankruptcy.

 

ESL contends the new bid, $900 million more than previously offered, should satisfy previous concerns raised in U.S. bankruptcy court after his earlier plan was rejected. The terms include up to $166 million to cover payments to suppliers, up to $139 million of bankruptcy-related expenses and up to $43 million of additional employee severance.

 

ESL also said it also wants to acquire assets that weren’t in the original proposal. ESL is working with lenders to finalize a $175 million secured real estate loan and agreed to put up half the money and pay as much as $135 million of property taxes for locations acquired in the bid, with additional assets including about 57 properties, as well as accounts receivables and additional inventory. There is also no breakup fee involved.

 

The bid is still conditional on the release of Lampert and ESL from claims tied to deals before the bankruptcy. 

 

A Proposal which allows for continuation of a slimmed down business and retention of employees with continued employment and severance compensation is expected to have greater appeal than an outright liquidation. 

 

The deal is expected to receive final approval from the Court at the end of the month. The following are future deadlines for sale of Assets and Assumption of Liabilities:

 

• The later of (i) January 24, 2019 and (ii) eight days of filing of the Notice of Auction Results and Service of the Adequate Assurance Information: Deadline to objects deposition of 120 Mill to (i) the proposed Sale Transaction for a Successful Bidder (including a Stalking Horse Bidder), (ii) Debtors’ proposed Cure Costs for Proposed Assumed Contracts not included in any Stalking Horse Bid, (iii) the assumption of and assignment to a Successful Bidder that is not a Stalking Horse Bidder of any Proposed Assumed Contracts or any Contracts or Leases that may later be designated by such Successful Bidder for assumption and assignment, and (iv) conduct of the Auction
• 
January 29, 2019 (4:00 p.m.) or two days prior to the Hearing Date: Debtors’ deadline to reply to Sale Objections
• 
February 1, 2019 (10:00 a.m.): Sale Hearing


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