A federal judge yesterday okayed the sale of bankrupt Sears Holdings to its chairman, Eddie Lampert for $5.2 billion, a move that the judge said made “sound business sense” because it would keep some 425 stores open and about 45,000 people employed.
The New York Times writes that the hearing was “a referendum on Mr. Lampert, the company’s chief executive and largest shareholder who has controlled Sears since 2005.
“Many of the company’s creditors accused Mr. Lampert and his hedge fund, ESL Investments, of running Sears into the ground, racking up losses and falling behind competitors, while spinning off the company’s most valuable assets in ways that enriched his hedge fund. They questioned why Mr. Lampert, after years of failing to turn around the company, should be given the opportunity to acquire Sears out of bankruptcy. A committee of creditors wanted to liquidate the company and collect the proceeds, rather than take another risk on Mr. Lampert.”
The judge in the case ruled that the creditors “failed to prove that they would recover more money by selling off the stores and other properties,” though the Times writes that the “creditors committee nevertheless won an important concession in the case. It can still file lawsuits against Mr. Lampert for past deals that resulted in spinning off real estate and other valuable assets to companies that his hedge fund had stakes in. A lawyer for ESL said the claims were without merit.”
The New York Times writes that the hearing was “a referendum on Mr. Lampert, the company’s chief executive and largest shareholder who has controlled Sears since 2005.
“Many of the company’s creditors accused Mr. Lampert and his hedge fund, ESL Investments, of running Sears into the ground, racking up losses and falling behind competitors, while spinning off the company’s most valuable assets in ways that enriched his hedge fund. They questioned why Mr. Lampert, after years of failing to turn around the company, should be given the opportunity to acquire Sears out of bankruptcy. A committee of creditors wanted to liquidate the company and collect the proceeds, rather than take another risk on Mr. Lampert.”
The judge in the case ruled that the creditors “failed to prove that they would recover more money by selling off the stores and other properties,” though the Times writes that the “creditors committee nevertheless won an important concession in the case. It can still file lawsuits against Mr. Lampert for past deals that resulted in spinning off real estate and other valuable assets to companies that his hedge fund had stakes in. A lawyer for ESL said the claims were without merit.”
- KC's View:
-
Lampert may have been given another shot at saving Sears, but it is far more likely, in my view, that this deal will only allow him to suck out whatever value its holdings may have before the retailer finally - maybe even mercifully - gets put out of its misery.
I have to wonder who Lampert is going to get to run the company …and who’d even want to work in this sort of situation, where there seems to be so little upside.
