Economy

Sears could announce plan to liquidate as soon as Tuesday

Sears could announce plan to liquidate as soon as Tuesday

Parent company Sears Holding Corporation is due in bankruptcy court Tuesday and reports from Reuters and others indicate they will ask to proceed with liquidation.

Many of Sears' major creditors have said they want the company to liquidate. By 2016 the combined retail venture Sears Holdings was locked in a downward spiral of falling revenue and rising debt, with customers defecting from stores considered outdated and stocked with unappealing merchandise. But many retailers end up going bust after filing, despite plans to stay in business.

Lampert, though, protested the decision, highlighting the extensive costs of Sears' bankruptcy advisors, a person familiar with the situation told CNBC.

Lampert's ESL Investments said late last month it was prepared to pay $4.4 billion for numerous retailer's remaining assets, including about 425 Sears and Kmart stores.

Sears' lawyers said a revised bid will require Mr Lampert to make a $120m (£94.4m) down payment, through his hedge fund, by 4pm NY time on Wednesday.

Sears' bankruptcy attorney said on Tuesday the retailer will move forward with its planned auction, set for January 14, averting liquidation plans that were supposed to be announced earlier in the day. In recent years, Toys "R" Us, RadioShack and Sports Authority have followed that path to the graveyard.

The bid now requires Lampert to deposit $120 million by 4 p.m. Wednesday through his ESL hedge fund. As many as 50,000 jobs are at stake.

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But it wasn't immediately clear just how much additional cash Lampert will pay for the assets.

The offer from Lambert is $4.4 billion, however it does not complete the sale.

But the deal announced Tuesday afternoon at least gives the company a chance of surviving.

A hearing is scheduled for Tuesday in bankruptcy court. The attorney does not represent Lampert.

Lampert had submitted a bid on December 28. Those creditors, which include Sears landlords and bondholders, have also questioned Lampert's pre-bankruptcy transactions with the retailer.

Lampert and his hedge fund argue the loans were proper and made to keep Sears alive. In bankruptcy court filings it called Sears previous plans to stay in business "nothing more than wishful thinking " and "an unjustified and foolhardy gamble with other people's money".