Sears chairman to offer $1.8B for company’s real estate holdings if auction bid fails

Edward Lampert and a Sears building (Credit: Getty Images and iStock)

What was meant to be a last-ditch effort now has a back-up plan. The Sears bankruptcy saga continued today as the company disclosed that Chairman Eddie Lampert’s hedge fund, ESL Investments Inc., expressed interest in buying the retailer’s real estate for $1.8 billion.

ESL submitted a $4.4 billion bid to keep some Sears stores open last Friday, on the last day for parties to submit bids for the bankrupt retailer. Liquidation groups submitted two competing bids for all of the company’s properties as well. Sears board members have until this Friday to determine which of the bids are qualified to proceed to an auction, which is scheduled for mid-January.

ESL, already Sears Holdings’ biggest shareholder and creditor, first made an indicative $4.6 billion offer in early December for hundreds of Sears stores across the country. That offer was criticized by the company’s unsecured creditors because, among other things, it released Lampert and others from litigation claims related to their oversight of Sears before the bankruptcy. ESL’s final, official offer was reduced slightly to $4.4 billion, covering about 425 Sears stores.

If the auction bid fails, ESL’s latest proposal includes a bid for Sears’ real estate as well as $25 million for Sears Home Services, plus a $150 million credit bid for intellectual property such as the Sears name.

The four liquidation firms that paired up to submit bids for Sears had already teamed up once earlier this year, when they liquidated all of Toys “R” Us’s stores in the U.S. A Sears liquidation would leave struggling malls across the country with even more vacant space to fill.

The 125-year-old Chicago-based retailer filed for bankruptcy in October, saying it planned to close 142 stores around the end of the year. There are about 900 Sears and Kmart locations left today nationwide, compared to 3,500 in 2005, when the chains merged under Lampert. [WSJ] —Kevin Sun

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