Lampert to bid for Sears real estate if rescue attempt fails
Sears Chairman Eddie Lampert’s hedge fund, ESL Investments Inc., is interested in scooping up Sears Holdings Corp.’s real estate for $1.8 billion if its offer to buy the company out of bankruptcy as a going concern fails, Sears disclosed in a filing Wednesday.
The billionaire’s hedge fund, which had controlled Sears, last week made a $4.4 billion bid to carve out a chunk of Sears stores and keep them open. At the same time two teams of liquidation firms submitted competing bids to liquidate all of Sears and sell off the pieces, according to people familiar with the matter.
If ESL’s bid to keep 425 Sears stores open doesn’t succeed, the hedge fund plans to make a $1.8 billion offer for the company’s real estate, according to the filing Wednesday.
Sears and its independent board members have to determine by Friday if ESL’s bid is “qualified” under the sale procedures approved by the bankruptcy court.
If the bid passes muster, Sears and its independent board members will then have to determine if the ESL offer is a better outcome for the company and its creditors than the either of the offers from liquidators.
A preliminary version of ESL’s offer for Sears made in early December came under fire from the company’s unsecured creditors because it releases Lampert and others from future lawsuits related to their oversight of Sears before its bankruptcy filing.
“The issue I think that the company and creditors may have with Lampert’s bid is that it is conditioned on the company releasing litigation claims against him and his hedge funds” said Jeff Marwil, partner at Proskauer Rose LLP, which isn’t involved in Sears’ bankruptcy case.
The unsecured creditors also object to the so-called credit bid that is part of ESL’s offer.
A portion — approximately $1.3 billion — of the hedge fund’s $4.4 billion offer is in the form of a “credit bid” consisting of real estate-backed loans that ESL made to Sears, according to a Sears filing with the Securities and Exchange Commission on Wednesday.
“As we previously said, we believe that our going concern bid provides the best path forward for the company,” said a spokesman for ESL, who also said it was “the best option to save tens of thousands of jobs and is superior for all of Sears’ stakeholders to the alternative of a complete liquidation.”
The ESL spokesman also said, “We will continue to believe in Sears.”
ESL’s “alternative proposal” includes a bid for Sears’ real estate as well as $25 million for Sears Home Services and a $150 million credit bid for certain intellectual property, including the Sears name, according the Sears filing. ESL’s offer for different parts of Sears in a liquidation would be “significantly less than we have submitted in our going concern proposal,” the hedge fund said in its offer to Sears.
Liquidation firms Tiger Capital Group LLC and Great American Group LLC teamed up to place a liquidation bid, with the option of joining with other liquidation firms, people familiar with the matter said. Meanwhile, Gordon Brothers Retail Partners LLC and Hilco Global Merchant Resources LLC joined forces in another bid, the people said.
Sears and representatives for its unsecured creditors committee didn’t return calls.
Two teams of liquidation firms submitted competing bids to liquidate all of Sears and sell off the pieces, according to people familiar with the matter.
Eddie Lampert