Sears Holdings reached a roughly $5 billion deal with its chairman, Eddie Lampert, early Wednesday morning to keep the company, and roughly 400 stores, in operations, according to a person familiar with the situation.
The deal came after days of negotiations held at held at the law firm Weil, Gotshal & Manges. Lampert has been trying to buy Sears out of bankruptcy through an affiliate of his hedge fund ESL Investments. The owner of Kmart and Sears had filed for bankruptcy in October and Lampert's bid was the only one that would have kept it alive.
The offer had strong bargaining tools: it could save up to 50,000 jobs and create an infrastructure to support the continued operations of its businesses like Sears Home Services. But multiple offers that Lampert put forward over the past few weeks have fallen short.
There have been questions about the bid's ability to cover Sears' administrative expenses, like vendor payments and advisory fees. The bid has also relied on a so-called credit bid − funding the deal in part by forgiving debt owed to ESL Investments. Sears' unsecured creditors have objected to its use.
At one point on Tuesday, Lampert seemed unable to bridge the gap, and his offer was effectively dead, people familiar with the matter said. In a conversation with the bankruptcy judge, however, ESL and Sears were instructed to wrap up a deal. They ultimately came to one early Wednesday morning.
Still, obstacles for Lampert and Sears remain. Sears' unsecured creditors are not on board with Lampert's bid, a person familiar with the situation said. Any offer will need to be approved by the bankruptcy judge on Jan. 31.
The people requested anonymity because the information is confidential. A spokesperson for ESL declined comment.
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