Sears Holdings Corp Chairman Eddie Lampert won a bankruptcy auction to buy the once iconic U.S. retailer after presenting an improved offer of $5.2-billion, Sears said on Thursday, but creditors quickly moved to oppose the deal.
Sears picked Lampert’s hedge fund ESL Investments Inc as the winner at a bankruptcy court-supervised auction after his latest bid topped an earlier $5-billion proposal following weeks of talks.
The deal would keep open more than 400 stores, preserve up to 45,000 jobs and ESL would acquire substantially all of the company, including its “Go Forward Stores” on a going-concern basis, Sears said.
“We are pleased to have reached a deal that would provide a path for Sears to emerge from the chapter 11 process,” the restructuring committee of Sears’ board of directors said in a statement.
The official committee of unsecured creditors said in a court filing it opposed the sale and asked court permission to file under seal a complaint against ESL for years of misconduct.
“ESL’s current bid to ‘save the company’ is nothing but the final fulfilment of a years-long scheme to deprive Sears and its creditors of assets and its employees of jobs while lining Lampert’s and ESL’s own pockets,” the committee said.
The committee said it wanted to disallow the debt that ESL used to bid for Sears and wanted to unwind deals from recent years that the committee said benefited Lampert, including the sale of real estate assets and the spinoff of Lands’ End.
ESL said in a statement it would “vigorously contest” any effort to pursue claims against it or Lampert. The fund said it had extended $2.4-billion to Sears for its transformation plan and its deals were approved by the board’s independent directors.
A Sears spokesman declined to comment.
The sale to ESL must be approved by a U.S. bankruptcy judge and a hearing to consider the deal is currently scheduled for Feb. 1. If approved, the transaction is expected to close on or about Feb. 8, Sears said.
More than 20 U.S. retailers have filed for bankruptcy since the start of 2017 in the face of e-commerce competition from companies like Amazon.com Inc.