Judge Drain Grants Sears Holdings Corp A New Lease Of Life
Sears CEO Eddie Lampert had filed for bankruptcy Chapter 11protection in the month of October. The company had faced hard times with recession and severe competition from other giants in the field like Target, Walmart and Amazon.
Lampert has been the CEO from 2013 and had stepped down in October.
However, bankruptcy judge Robert Drain has given the green signal for Sears. With an amount of $5.2 billion, the Sears chairman will have to revive the company.
This victory also means that the 425 stores which provide employment to 45,000 people will be saved.
The judge overruled objections which arose from unsecured creditors, suppliers and mall owners who wanted it to be liquidated. They had asked the court to liquidate the assets and close down the company, by which most of the money would be repaid to creditors.
The order will be entered officially on Friday. The trial was spread over three days and Drain overhead the judges from the creditor’s side who pointed out the previous failures of the retail giant, before making the decision.
After hearing the argument from both sides, Judge Drain has taken the decision to favor Sears. Sears Holdings owns Kmart and Sears department stores. The bankruptcy was filed in October and it has taken quite some time to be finalized.
Sears, however, has long-term problems that it has to survive. Competition is still stiff and the retail stores have become old-fashioned. The company has not been profitable from 2010 as it faces declining sales with the trend shifting towards online sales.
Lampert has a 31 percent stock in its outstanding stock. His ESL hedge fund owns 18.5 stakes in the company. He had funded the company with his own money and kept the stores running by selling branded products like Craftsman tools.
Kunal Kamlani, the president of ESL says that business will continue only in 425 stores out of 700.