Sears creditors challenge ESL’s winning bid


A group of creditors is objecting to the deal, one of the sources said.

A group of Sears creditors is challenging Eddie Lampert's victory in purchasing the company out of bankruptcy and asking for permission to sue Lampert and his hedge fund, ESL Investments.

ESL said in a statement that all transactions injected much needed liquidity into the business, were done in good faith and were also approved by the company's board, including independent directors.

The ESL bid will save tens of thousands of jobs, fund some severance costs and reinstate severance benefits for eligible employees in a new company, according to a statement from the hedge fund.

The deal remains subject to the approval of a bankruptcy judge, with some 45,000 jobs at stake at Sears stores nationally and its headquarters office in Hoffman Estates, Ill., according to Reuters.

A hearing to approve the sale is now scheduled for February 1 and, if successful, the transaction is expected to close on or about February 8, Sears said.

The agreement follows marathon negotiations that started early Monday as Lampert was fending off demands from creditors who were pushing for liquidation.

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Still, many experts believe a smaller version of the retailer will not be viable as it faces increasing competition from the likes of Amazon and Walmart.

Lampert's $5 billion offer had taken on another $600 million-plus in liabilities, and marked $35 million for a so-called release from litigation.

"ESL's bid to "save the company" is nothing but the final fulfillment of a years-long scheme to deprive Sears and its creditors of assets and its employees of jobs while lining Lampert's and ESL's own pockets", the filing says. Lampert has said the deals were proper. The bid also will honor extended warranties on products previously sold by Sears.

Lampert beat out bids from liquidators that would have forced the 126-year-old department-store chain to shut down.

The sale to ESL must be approved by a USA bankruptcy judge and a hearing to consider the deal is now scheduled for February 1.

Lampert's bid, higher than his earlier $5 billion offer, comes after weeks of deliberations that culminated in a days-long bankruptcy auction held behind closed doors. At its peak in 2012, its stores numbered 4,000.