The federal retirement benefit corporation has filed a bankruptcy proposal opposite the sale of Sears to former CEO Eddie Lampert and his hedge fund. (Photo: http://abcnews.go.com/)
Sears bankruptcy lawyer Ray Schrock said Monday in a court statement that the company does not agree with the hedge fund ESL Investments interpretation of their agreement to preserve Sears in shrinkage form.
ESL, owned by controversial Sears chairman and former CEO Eddie Lampert, is not willing to accept up to $ 166 million in accounts payable as part of the dealership agreement, Schrock judge Robert Drain said.
"We believe the deal is clear as it is drafted," Schrock said.
He said that Sears and ESL are talking about that problem and hope to fix it. But he admitted that the dispute may lie as the judge continues a court hearing to rule if Lampert was allowed to buy the company.
ESL was not immediately available for comments Monday afternoon.
Abid Qureshi, a lawyer for a group of unsecured creditors who opposes the Lampert agreement and believes that Sears should be liquidated, said "we were quite surprised" when the dispute arose late Sunday.
"We think we have the right to know what the objection is," Qureshi said
Schrock said that Sears still hopes to win the referee's approval for the sale this week and close the transaction on Friday.
If the agreement collapses, liquidation is almost safe.
The company came within inch Sears board member William Transier testified of negotiations to sell himself in a bankruptcy auction in mid-January.
A board committee formed to negotiate and evaluate offers for Sears sent representatives to the Judge's chambers on January 15 to alert him that they could not come to an agreement.
But Drain told the company to try to reach a final deal because it was his "very strong" preference for saving as many jobs as possible, Transier said.
With these marching orders, ESL and Sears continued talks and reached agreement early on January 16. Transies testified.
"The days ran together and I was there all the time," Transier said in the courtroom.
During Monday's hearing, lawyers for the selection of unsecured creditors – which include large shopping malls like Simon Property Group who want Sears to leave the business – pelted Sears representatives with questions seeking to undermine the company's case to sell themselves.
But Judge Drain, who will make the final decision, obviously seemed annoyed at times with this question and interviewed on several occasions with comments asking the relevance of t hose questions.
The courtroom showdown can mark the dramatic finale of a year-long tale in which Sears, once the nation's largest and most influential dealer, rages in massive debt, more rivals, and a mall that has mostly gone on.
Drain decides whether Sears can be sold to ESL, continues as a large smaller company with about 400 stores and 45,000 employees, or goes out of service.
Lampert has long been criticized for capitalizing on the complex financial transactions he has executed to keep Sears afloat. The United States today reported in June that Lampert received up to $ 220 million a year in loan payments from the dealer, which also owns Kmart, and had structured loans to ensure that his hedge fund got access to key holdings.
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Meanwhile, Sears has shuttered More than 3,500 stores and slashed about 250,000 jobs in about the last 15 years. In October, the company filed for bankruptcy protection for Chapter 11.
ESL has strongly denied allegations that it undermined Sears, saying that the actions it was doing were done "in good faith", with a view to taking advantage of all the company's stakeholders.
The court may not throw an agreement that could be the only way a company that supplies thousands of jobs is able to stay in business.
With Sears filing for bankruptcy and as many stores closing, the end may be approaching the iconic US retailer. Many of us are not clear.
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