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In this Tuesday, Jan. 1, 2019, file photo signs mark the closing of a Sears store in the Streets of Southglenn mall in Littleton, Colo.

HOFFMAN ESTATES — Sears Chairman Edward Lampert has raised his bid to buy the bankrupt retailer's assets, submitting a proposal that could top $5 billion.

The new offer would see Lampert's hedge fund, ESL Investments, take on up to $663 million in additional liabilities in an effort to strengthen its offer before a Monday bankruptcy auction. At stake? Whether the 125-year-old retailer, with hundreds of stores and tens of thousands of employees, will land another lifeline from Lampert, its former CEO, or face liquidation.

At a Bankruptcy Court hearing Tuesday, Hoffman Estates-based Sears Holdings Corp. agreed to consider Lampert's revised bid to keep the retailer alive alongside other offers for its assets.

The increase in the bid's value comes from additional liabilities Lampert's ESL agreed to take on, including up to $43 million in employee severance costs and payment for merchandise Sears ordered shortly before filing for Chapter 11 in October and goods ordered before the deal closes, according to a letter to Sears' investment banker released Thursday in a regulatory filing.

The deal would leave ESL with some additional assets, including 57 more real estate properties.

"We believe our proposal will provide substantially more value to stakeholders than any other option, in particular a liquidation, and is the best path forward for Sears, its associates and the many communities across the United States touched by Sears and Kmart stores," ESL said Thursday in an emailed statement.

Lampert had until Wednesday afternoon to submit the new offer and a $120 million deposit, a deadline ESL said was met.

Lampert's ESL said late last month that it was prepared to pay $4.4 billion for many of the retailer's remaining assets, including about 425 Sears and Kmart stores, an offer the hedge fund said would preserve up to 50,000 jobs.

At Tuesday's hearing, an attorney representing a committee of Sears' creditors said it had concerns about the rescue bid and believes there are "significant viable claims against ESL."

ESL has offered $35 million in exchange for a release from any liability related to transactions between the hedge fund and the retailer prior to Sears' bankruptcy filing.

In November, the creditors committee raised questions about financial dealings between Lampert, ESL and Sears, saying those transactions "may be part of an extended pattern of conduct that served to benefit certain (insider) equity holders," according to court filings. Lampert served as CEO of Sears until the bankruptcy filing.

Also at issue is whether ESL will be able to finance a portion of its bid by trading $1.3 billion in Sears debt it holds for ownership in the reorganized company. That question will be settled at the auction.

The creditors committee has questioned whether a sale that would keep Sears in business can succeed and argued a liquidation would recover more of the money the company owes, according to court filings.

But an earlier version of ESL's bid did win support from three of Sears' vendors, Mien Co., Helen Andrews and Strong Process Garment Factory Co., who said in court filing that they think it is their best shot of being repaid.

Sears has not said how many other offers it received or whether any others would let the retailer remain in business.

An earlier version said the bid included an extra $35 million in exchange for releasing ESL from liabilities. That amount was included in the hedge fund's previous bid.

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