Sears Hearing Could Determine the Troubled Retailer’s Future
The U.S. Bankruptcy Court for the Southern District of New York will hold a hearing starting Monday that could determine the future of American retailer Sears.
The hearing is the last chance to save the jobs of as many as 45,000 employees of Sears and K-Mart nationwide, CNN reports. It will also address Sears’s plan to sell its assets, including 425 stores to chairman Eddie Lampert, through his hedge fund ESL Investments in a move to keep the retailer afloat.
Lampert’s attempt to save the company is opposed by unsecured creditors, who are owed money by Sears, and the federal watchdog Pension Benefit Guaranty Corp. The former have accused Lampert of “stealing assets” and “years of misconduct,” in a number of court filings, CNBC reports.
PBGC filed a complaint in Chicago federal court on Friday objecting to Lampert’s proposal for a $5.2 billion buyout of the company. Instead, PBGC seeks to take control of two pension funds to pay 90,000 Sears retirees and beneficiaries, which it says are underfunded by $1.4 billion, according to Reuters.
The fate of the plan will be decided by Judge Robert Drain this week, in an expected two-day hearing on Monday and Wednesday. Drain has erred on the side of keeping the chain open and pushing for Lampert and Sears to strike a deal to save jobs.
The judge has twice offered Lampert and Sears an extension to write a resolution. At a hearing on Jan. 18, he said “it would be a very good thing” to save the 45,000 jobs that are at risk, according to CNN. However, the upcoming hearing will focus on returning money that is owed to creditors, who are owed more than $3 billion.
Sears filed for bankruptcy on Oct. 15, with hopes of remaining in business.