The legendary retail giant Sears will review a revised rescue bid from its chairman, Eddie Lampert, before moving forward on total liquidation, giving the hedge-fund billionaire a final shot to buy the withered department-store chain out of bankruptcy.
Sears’ directors had signaled interest in rejecting Lampert’s $4.4 billion offer, a move that would have marked a last gasp for the once-invincible retail behemoth that employed nearly 70,000 workers last year.
But a Sears attorney told a bankruptcy judge on Tuesday that the company would review an amended Lampert takeover bid as part of an auction on Monday, in which the company also will assess proposals to liquidate — the preferred route of many of Sears’ landlords, vendors and other creditors.
Lampert’s hedge fund ESL Investments must pay a $120 million deposit by late today to continue pursuing the offer. If that bid is rejected, the bankruptcy court could approve liquidation by the end of this month.
An ESL Investments spokesperson said in a statement “our proposal provides substantially more value to stakeholders than would be the case in liquidation and is the only option to save an iconic American retailer.” A Sears Holdings spokesperson declined to comment.
The 126-year-old Sears, Roebuck & Co. revolutionized American capitalism and famously spawned the “everything store” concept that ultimately led to its demise, fanning across the country, selling toys, tools, sofas, clothes and everything else to the country’s increasingly prosperous middle class.
But the company, long since eclipsed by retail rivals such as Walmart and Amazon, has in the past decade lost billions of dollars and closed hundreds of stores, becoming one of the most visible symbols of the fall of America’s brick-and-mortar retail empires.
“This brand really lost its relevance and its reason for being. Folks no longer really knew what Sears even was,” said Tom Lynch, a senior managing director at SierraConstellation Partners, a corporate restructuring firm. “When you get to that point, it’s really hard to imagine turning around.”
Sears struck a defiant note on Monday, likening the company to a slowing-down “marathon runner” that is “not out of the race just yet.”
But the company now stands on the brink of a vast and devastating liquidation that could be one of the largest in corporate American history. If Sears again rejects Lampert’s bailout bid, the company’s assets would likely be chopped up and dispensed in a fire sale to help pay down its billions in debts.
Sears dominated 20th-century commerce by helping introduce generations of shoppers to mail-order catalogues and “big box” stores full of the moderately priced staples of daily life. When Sears merged with Kmart in 2005, the resulting conglomerate, Sears Holdings, became America’s third-largest retailer, with $55 billion in annual revenue and 3,500 stores.
But Sears has struggled unsuccessfully to adapt to the same broad reshifting that helped upend J.C. Penney and Toys R Us: consumers’ preference for shopping online. Sears has in recent years become a punchline, when thought of at all: Fewer than 1 in 10 millennials surveyed last year by the corporate-perception tracker YouGov BrandIndex said they would consider shopping there.