The crisis took a new turn this week after Sears failed to pay the bankruptcy expenses to its legal consultants, and the management decided to inform the court about its objection to Lampert’s offer.
The order came as a big relief for Sears, which has been on the verge of liquidation after all the efforts to salvage it failed
As per the court’s directive, ESL has to deposit $120 million before Wednesday evening to avoid the liquidation process. The next step will be the auction, to be held early next week, at which ESL will compete with the other bidders, which will be followed by the final approval by the court by month-end.
The downfall of Sears is a classic example of how traditional American retailers are being crushed by the growing competition and the rapid adoption of e-commerce, an area dominated by Amazon (AMZN) and Walmart (WMT). Experts are of the view that more Sears stores will be closed soon, irrespective of the final outcome of Lampert’s acquisition bid.
Being unable to operate its remaining outlets, which once formed part of a huge store network, the company was forced to file for bankruptcy protection in October last year. Of late, the more-than-a-century-old retail store chain has been rapidly shrinking amid operational losses and mounting debt.
When Lampert came up with the initial offer of $4.6 billion in early December, it was seen as the last chance for Sears to survive. The offer also gives some hope to suppliers and lenders who are currently apprehensive about the future of the company.