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Sears has been an American icon for more than a century, but its more recent turbulent years plagued by consumer defections, store closings and bankruptcy may soon culminate in liquidation.
We'll know if 24 hours if Sears has a chance to survive but at the moment no bid to save the company has been presented. In bankruptcy since mid-October, the retailer faces a December 28 deadline with the courts for potential suitors to make an offer. Thus far, only its chairman, Eddie Lampert, has shown interest in a bid, saying he wants to pull together $4.6 billion to purchase and therefore save Sears – protecting the jobs of 50,000 workers and keeping many stores open.
Lampert, the hedge fund manager who orchestrated a purchase of Sears, and then ushered it into bankruptcy, angering employees and dirtying his reputation that was once compared as an up-and-coming Warren Buffett. Lampert, however, said soon after Sears filed for bankruptcy this fall that he tried to make the retailer work and that he's suffered from its failings, disputing accusations that he has merely been a hedge fund blood-sucker on the brand who has pocketed cash during its demise.
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"I've taken a huge personal hit," Lampert told the New York Times. "Not just in money, but time. There's been an enormous opportunity cost."
But now, he's almost out of time. Lampert will either, assemble financing in the next 24 hours and present that to the court, maintaining the possibility that the Sears brand as we know it will be kept alive, or Sears will be broken up and sold in pieces in liquidation, ending the 125-year run of an American business iconic brand.
Lampert was expected to encounter difficulty pulling together financing for his $4.6 billion proposal because most of the money would come from outside sources and Sears doesn't have much to offer in worthy collateral for that type of money beyond its name, leases and locations.
With 500 stores still open (more than 100 have been shuttered this year), Sears, which also owns the Kmart brand and locations, has reportedly had a less-than-stellar Christmas shopping season, reducing its chances of both financing and survival since every dollar at this juncture matters. Similar to how Toys R Us crumbled in bankruptcy last year, Sears faces a similar fate -- it could evaporate more quickly than many saw coming.
Without well-developed online sales, competing against the likes of Walmart and Amazon is difficult. Also, many of its brick-and-mortar stores due to bankruptcy suffered from staffing, inventory and aesthetic issues. That's undoubtedly why some creditors involved in the Sears bankruptcy filing are less than enthusiastic about Lampert's potential bid. It's been called a "foolhardy gamble with other people's money" in a court filing, according to CNBC.
"The question is if there is anyone but Lampert or the employees who view Sears coming out of bankruptcy — rather than liquidation — as the better outcome," said Philip Emma, senior analyst with Debtwire and an expert in retail bankruptcies, according to CNN.
At the moment, there's just one more day of waiting to see if Lampert does, in fact, pull together his bid to purchase Sears assets, including its Kenmore appliance brand, and keep the company alive. If he's not successful, or if the bankruptcy judge turns rejects the offer, then the liquidation of Sears would begin.
The process would take weeks to months likely, but it would start with store closings, eliminating jobs for the 60,000-plus reportedly employed, and then assets including the Kenmore brand and possibly kmart.com or sears.com would be sold to the highest bidders. It's unlikely that the Sears brand as it currently exists would survive.
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