White Plains, NY - A bid for Sears that has pitted the company's controversial former CEO against its creditors and employees, will head back to court Wednesday where a judge will move closer to a final decision on the beleaguered retailer's fate.
This will be the second day of a hearing on whether a hedge fund owned by Sears chairman Eddie Lampert can purchase a shrunken version of the business, and it promises to be yet another face off with the federal government, mall owners and other unsecured creditors who say Lampert's offer is yet another attempt to drain Sears dry and enrich himself.
That criticism was echoed by some current and former Sears employees who wrote a letter to U.S. Bankruptcy Judge Robert Drain asking for a meeting and for him to take steps to protect them, including making sure a worker's representative gets a place on the board of any new company.
"For the sake of our jobs, our coworkers, our communities, and our families, we want Sears Holdings to succeed, not be a pawn in Lampert’s game," the employees wrote. "The reality, as we know from our lived experience, is that Lampert has been putting the company through the longest liquidation in retail history. If he regains control of Sears, he will merely continue that slow burn."
In roughly the last 15 years, Sears closed more than 3,500 stores and eliminated about 250,000 jobs as the company struggled to stay afloat amid flagging sales and more nimble competition. It finally filed for Chapter 11 bankruptcy protection in October.
The offer by Lampert's ESL Investments would preserve 425 stores and roughly 45,000 jobs, and is likely to be the only deal that can keep the company, which also owns the Kmart chain, from going out of business.
But the final court hearing on whether the sale should be approved has revealed numerous stumbling blocks, from the push back by creditors, to a dispute over $166 million in accounts payable that Sears bankruptcy attorney Ray Schrock said Monday that ESL does not want to assume.
Even the U.S. government's pension insurer, PBGC, has criticized ESL's offer saying it allows Lampert to grab hold of assets that should go toward pension payments that the federal entity will have to help pay. Those retirement benefits will be protected no matter the outcome of the pending sale.
Despite the objections, Sears board member William Transier testified Monday that Drain had previously conveyed his desire to see a sale rather than liquidation so that jobs could be saved.
But even if ESL assumes ownership of the retailer, Transier testified that more stores could close, and more jobs could be eliminated.
The demise of Sears has been years in the making as a company that was once the nation's biggest retailer and a ubiquitous fixture in American life became increasingly irrelevant amid the rise of Walmart and Amazon.
Now, a final decision on whether it's storied history comes to an end or it continues in a drastically shrunken form could come quickly.
The hearing may continue into Thursday, but if a sale gets the green light, Schrock says the company would like to close the deal on Friday.
This article originally appeared on USA TODAY: Sears will be back in court as fight over whether to sell to its former CEO rages on