Edward Lampert has filled in the blanks on his $4.4 billion rescue bid for Sears, but a couple of key numbers were still missing less than a day before a key court deadline: How much did the liquidators offer?
Two bids from breakup firms have been submitted, and if either one tops Lampert, Sears Holdings Corp. could turn out to be worth more dead than alive for its creditors. Those numbers hadn't been publicly announced as of late Thursday.
Lampert's ESL Investments is offering to keep the bankrupt chain in business and up to 50,000 people employed. But it's possible his plan won't be deemed solid enough to qualify, all but assuring that the company will be shut down and sold off in pieces. The deadline for Sears to tell bidders if they're still in the running is 4 p.m. New York time.
"The plan does preserve thousands of jobs; I'm sure that provision is in there to sugarcoat the deal and make it appealing," said Murillo Campello, finance professor at Cornell University's Johnson College of Business. But it's just delaying Sears' inevitable demise, Campello said. "If it goes through liquidation, the unsecured creditors are likely to get more than if they go with Eddie Lampert's plan."
Assuming more than one bidder makes the cut, an auction is scheduled for Jan. 14. After that, Sears will declare a winner and then ask the bankruptcy judge to ratify the decision. No sale to Lampert or liquidation can take place without the judge's approval.
Lampert has been trying to shape the debate by emphasizing the potential for massive job losses. The consequences aren't lost on some lenders, who are wary of being blamed for the collapse of a big, iconic employer the way their peers were in last year's dismantling of Toys R Us. Read more