Sears gets court approval to sell stores

The company must find an alleged stalker, or lead bidder, by December 15th, which would set the floor price for other offers. If there is more than one eligible offer for the stores, an auction will be held in mid-January.

Sears has focused its future on the sale of these stores since filing for bankruptcy on October 15. President Edward Lampert's hedge fund, ESL Investments Inc., is expected to bid for a hunting horse.

"There has been a tremendous amount of activity on the ALS front," said Sears lawyer Ray Schrock on Thursday. "It's easy to denigrate the main shareholder of the company … but whether you like it or not, if there is a buyer here who can save tens of thousands of jobs, we need to look at that seriously, and that's what we do. "

Through ESL, Mr. Lampert is Sears' largest shareholder and creditor, and his position in the company is closely scrutinized. Before filing for bankruptcy, he was also managing director.

The company has appointed a special committee to investigate past transactions between ESL and Sears. In addition, the Unsecured Creditors Committee has targeted ESL and will conduct its own investigation. Thursday, Justice Drain approved this secondary investigation.

Creditors in court documents have criticized ESL's role in Sears' years of decline and its path to bankruptcy. The group wishes to determine whether ESL and its affiliates may have used their insider status to obtain a larger position on Sears' debt, thereby allowing them to "distract from the value of the company" and to exercise "Undue influence" when filing for bankruptcy.

Mr. Lampert's office denied all allegations in the creditors' court documents, calling them "an attempt to poison the well against ESL". The hedge fund has stated that it will comply with the investigation by providing the requested documents.

In addition, the Unsecured Creditors Committee questioned the viability of selling Sears stores, raising concerns about the proposed business plan that would keep stores open, the costs of the sales process, and whether would be deducted from the recovery of other stakeholders. . Creditors also worry about the prospect that ESL will be the only bidder for the assets.

"Now that debtors have filed for bankruptcy protection, they can no longer build operations for the benefit of ESL," creditors said in court filings last week.

ESL has moved away from one aspect of the process: the company does not provide bankruptcy financing to Sears.

The firm was expected to participate in a subordinated bankruptcy loan to strengthen Sears' business in the coming months. In the first bankruptcy filings, Sears said ESL was in talks to provide a $ 300 million junior loan.

Shortly thereafter, however, the counselors and lawyers of the company began talking to other lenders. After weeks of negotiations, GACP Finance Co. LLP, the funding arm of Great American Capital Partners, has put forward a proposal to provide up to $ 350 million in financing for the junior level bankruptcy.

ESL is not part of the proposed funding, which must be approved by the court on November 27th. On Thursday, Mr. Schrock pointed out that, even though the terms of this loan are a little more expensive than those of ESL, the company's lawyers and advisors have found it important to appeal to a third party.

When she filed for bankruptcy protection, Sears had planned a $ 1.83 billion bankruptcy loan, most of which would pay off existing loans and include $ 300 million in new currency. Financing is provided by bank lenders, including Bank of America N.A.

Wells Fargo

& Co. and Citibank N.A.

The court will also consider approving this bankruptcy loan at the November 27 hearing.

The company also received court approval Thursday to proceed with the sale of its renovation business. Sears has received a $ 60 million criminal stalking offer from Service.com for the home renovation sector and, if necessary, an auction is scheduled for December 13th.

Write to Lillian Rizzo at [email protected]