11th-hour deal allows Sears to remain open - for now

A Sears sign is displayed at a store on Oct. 15 2018 in the Brooklyn borough of New York City

A Sears sign is displayed at a store on Oct. 15 2018 in the Brooklyn borough of New York City

One of America's most iconic businesses, which has been in business for over 125 years and still employees 68,000 people, is on the verge of liquidation after an eleventh-hour, $4.4 billion takeover bid failed to satisfy advisers to the company, which hasn't turned a profit in almost a decade.

Sears has a chance of surviving. The deal could keep 425 of the stores open.

Chairman Eddie Lampert had put forward a $4.4 billion bid to save Sears by buying it out of bankruptcy through his hedge fund ESL Investments.

The final deal also requires approval from US Bankruptcy Court Judge Robert Drain. An auction for Sears' assets is not due until January 14.

Sears is getting another reprieve from liquidation after its chairman and largest shareholder revised his bid to save the iconic brand.

Even though no other bidders stepped forward, Sears Holdings' board decided the offer wasn't good enough since almost a quarter of it was in the form of debt forgiveness.

The revised deal was reached after days of "virtually round-the-clock negotiations", Sears attorney Ray Schrock told the court.

Plagued by falling sales and heavy debt, Sears filed for Chapter 11 bankruptcy reorganization in October and announced plans to close 142 of its roughly 700 remaining stores and eliminate thousands of jobs. A subsidiary of B. Riley Financial, Great American partnered with Tiger a year ago to buy many of bankrupt retailer Bon-Ton Stores' assets and liquidate the company.

The costs, which include bills from lawyers and financial advisers, are expected to exceed US$200 million, those sources said.

The creditors have argued that forgiveness of his debt should not be accepted as part of the bid, because Lampert loaned Sears the money when he was CEO. Without an agreement, Sears faced the possibility of liquidation.

In general, bankruptcy courts would rather not liquidate a company if there's a chance to keep it alive and its workers employed, said David Stowell, professor of finance at Northwestern University's Kellogg School of Management. Meanwhile, Lampert also plans to present details of his offer and make the case for renewing efforts to save Sears in bankruptcy court on Tuesday.

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