A federal bankruptcy court judge has approved Eddie Lampert’s $5.2 billion bid to buy Sears, a deal that is expected to preserve approximately 425 stores and 45,000 jobs. Judge Robert Drain heard concerns throughout the three-day hearing from the retailer’s unsecured creditors, but determined that Sears has a credible plan to keep the stores open.
Lampert placed the winning bid for the bankrupt retailer through his hedge fund, ESL Investments — perhaps the only entity both capable and willing to prevent total liquidation. After his initial $4.4 billion bid against liquidators was rejected, Lampert upped the “rescue” deal to $5 billion and then $5.2 billion, which included meeting more payment obligations to vendors and additional severance costs.
While the bid keeps the stores open for now, the downward spiral that both Sears and Kmart experienced in the years prior to bankruptcy hasn’t inspired confidence that a true turnaround is possible. Overall, Sears Holdings hasn’t turned a profit since 2010, and the company has provided very little reason to think a revived Sears will be any more successful than before.
“There is no plausible scenario where Sears does not keep shrinking into oblivion,” wrote Steven Dennis, Founder of SageBerry Consulting in an article in Forbes. “There are few…