Time is running out for Sears; bankruptcy hearing Tuesday

Eddie Lampert gets another chance to save Sears with new purchase bid

There is a court hearing Tuesday morning in White Plains federal bankruptcy court, after which Sears is expected to announce whether it will liquidate, according to sources.

Lampert's offer was reportedly the only one that sought to rescue the company rather than liquidate it.

A judge still needs to approve the agreement.

It gives Sears a chance to survive, which appeared to be slipping way heading into the hearing.

Lampert has shuttered hundreds of money-losing stores, cut more than $1 billion in annual expenses, and spun off units such as Lands' End Inc. That raised concerns in the negotiations since the maneuver might not be allowed in court, the sources said, given ongoing investigations of Lampert's pre-bankruptcy deals, which the hedge fund manager maintains were proper.

The talks continued into Tuesday. In recent years, Toys "R" Us, RadioShack and Sports Authority have followed that path to the graveyard.

The bid called for keeping 425 stores open and offering jobs to 50,000 of its remaining employees.

"If Lampert's deal doesn't pay enough cash to pay their fees, they would have concerns", said bankruptcy attorney Kenneth Rosen of Lowenstein Sandler, who represents smaller creditors.

About $17.9 million of the $120 million deposit is nonrefundable and will cover the cost of delaying the company's liquidation if ESL doesn't emerge as the winning bidder, Schrock said. It was not immediately clear Tuesday how much, if any, debt forgiveness will be included in this revised offer. Sears had until Friday to accept it, but the company has not commented on the status of the bid. Those creditors, which include Sears landlords and bondholders, have also questioned Lampert's pre-bankruptcy transactions with the retailer.

Lampert and his hedge fund argue the loans were proper and made to keep Sears alive.

The chairman and CEO of Berkshire Hathaway warned 13 years ago, during a conversation he had in 2005 with students from the University of Kansas, that Sears Chairman Eddie Lampert's venture in merging Sears and Kmart was unlikely to succeed, as first reported by Business Insider.

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