Bankruptcy judge gives Sears another chance

The company’s corporate parent had 687 stores and 68,000 employees before filing for bankruptcy

A bankruptcy judge has blessed a $5.2 billion plan by Sears chairman and biggest shareholder to keep the iconic business going.

The approval means roughly 425 stores and 45,000 jobs will be preserved.

Eddie Lampert’s bid through an affiliate of his ESL hedge fund overcame opposition from a group of unsecured creditors, including mall owners and suppliers, that tried to block the sale and pushed hard for liquidation.

In delivering his decision Thursday, U.S. Bankruptcy Judge Robert Drain for the Southern District of New York rejected the committee’s claims that the sale process was unfair and flawed, that it shut out any other parties who could have been interested in buying the business and that Sears had more value to its creditors if it died than if it lived.

Lawyers for Sears and ESL argued that the sale offered the best deal and also preserved jobs.

Drain is expected to enter his order on Friday, making it official.

Even with this latest reprieve, Sears’ long-term survival remains an open question. Lampert hasn’t put forth any specific reinvention plans and the company still faces cutthroat competition from Amazon, Target and Walmart. Meanwhile, its stores look old and drab.

Lampert steered Sears into Chapter 11 bankruptcy protection in October. The company’s corporate parent, which also owns Kmart, had 687 stores and 68,000 employees at the time of the filing. At its peak in 2012, its stores numbered 4,000.

Sears was hard hit during the recession and outmatched in its aftermath by shifting consumer trends and strong rivals. It hasn’t had a profitable year since 2010 and has suffered 11 straight years of declining sales.

Lampert’s original plan had been rejected by a subcommittee of the Sears board. ESL sweetened the bid several times before the subcommittee gave it the OK.

A group of unsecured creditors, who rank at the bottom of the list to be paid, filed objections to the sale, alleging falsified financial projections, excessive buybacks, and a spinoff of key brands that stripped the business of key assets.

“The tortured story of Sears reads like a Shakespearean tragedy,” the group said. “Lampert and ESL managed Sears as if it were a private portfolio company that existed solely to provide the greatest returns on their investment, recklessly disregarding the damage to Sears, its employees and its creditors.”

Lampert personally owns 31 per cent of the Sears’ outstanding stock, and his hedge fund has an 18.5 per cent stake, according to FactSet. He stepped down as CEO in October after serving in that role since 2013.

Under Lampert’s watch, Sears has survived in part by spinning off stores and selling well-known brands like Craftsman tools. He has also lent some of his own money.

Lampert has been criticized for not investing in his stores. Even Senator Elizabeth Warren, a Massachusetts Democrat and potential presidential candidate, has attacked him and questioned his commitment to Sears workers.

“I am concerned that under your leadership, Sears may continue to struggle and employees will continue to face uncertainty and anxiety over their future employment, and ongoing risks to their benefits and economic security,” Warren wrote in a letter to Lampert made available to The Associated Press by a worker advocacy group.

One of the lawyers for Lampert’s hedge fund testified earlier this week that the 56-year-old billionaire has been portrayed as a cross between J.Gould, the late railroad tycoon, and Barney Fife, a fictional character in the popular TV show “The Andy Griffin Show.”

Drain, the bankruptcy judge, acknowledged that Lampert had been subject to “verbal abuse.”

“He is a wealthy individual and a big boy,” Drain said. “And I guess he can take it.”

But he added that Lampert “has an opportunity to not be a cartoon character.”

Anne D’Innocenzio, The Associated Press

Like us on Facebook and follow us on Twitter.

Just Posted

Keremeos man says stem cell therapy changed his life

Darryl Brewer says he went from being immobile with chronic pain to leading an active lifestyle

Okanagan-Shuswap Weather: Summer sun for Sunday

The forecast for the week ahead shows some rain but plenty of sun and warm tempertures.

Okanagan-Shuswap weather: Showers to start weekend, sun returning soon

Environment Canada forecasts rain on Saturday and the heat returning next week

UPDATE: Penticton resident’s dog found safe

Nicholas Bozak thanks the public for finding his 17 month old mastiff chow

RDOS contributes funds to arts centre workshop

South Okanagan Performing Arts Centre Society wants input into proposed facility

July showers wash out half of the Okanagan’s cherry crop

Cherry growers say this is the worst season they’ve seen in decades

Police on scene at Penticton beach

RCMP were at a what is believed to be a crime scene near Skaha Beach Sunday

Community service ordered for Princeton man who stole from firefighters

A young man who stole food and money from the Princeton Volunteer… Continue reading

Okanagan rainbow crosswalk defaced

Vandals cover colours with white paint in District of Coldstream sometime overnight Saturday

B.C. VIEWS: NDP pushes ahead with Crown forest redistribution

This isn’t the time for a radical Indigenous rights agenda

Two dead in two-vehicle crash between Revelstoke and Golden

RCMP are investigating the cause of the crash

Ottawa fights planned class action against RCMP for bullying, intimidation

The current case is more general, applying to employees, including men, who worked for the RCMP

Alberta judge denies B.C.’s bid to block ‘Turn Off the Taps’ bill

He said the proper venue for the disagreement is Federal Court

Hespeler had connection to Mennonite migration

Home in Summerland was built in 1907, moved when the highway was changed

Most Read