Sears sees last-gasp rescue bid as it barrels toward total collapse

The legendary retail giant Sears will review a revised rescue bid from its chairman, Eddie Lampert, before moving forward on total liquidation, giving the hedge-fund billionaire a final shot to buy the withered department-store chain out of bankruptcy.

Sears' directors had signaled interest in rejecting Lampert's $4.4 billion offer, a move that would have marked a last gasp for the once-invincible retail behemoth that employed nearly 70,000 workers last year.

But a Sears attorney told a bankruptcy judge Tuesday that the company would review an amended Lampert takeover bid as part of an auction on Monday, in which the company will also assess proposals to liquidate - the preferred route of many of Sears' landlords, vendors and other creditors.

Lampert's hedge fund ESL Investments must pay a $120 million deposit by late Wednesday to continue pursuing the offer. If that bid is rejected, the bankruptcy court could approve liquidation by the end of this month.

An ESL Investments spokesperson said in a statement "our proposal provides substantially more value to stakeholders than would be the case in liquidation and is the only option to save an iconic American retailer." A Sears Holdings spokesperson declined to comment.

The 126-year-old Sears, Roebuck & Co. revolutionized American capitalism and famously spawned the "everything store" concept that ultimately led to its demise, fanning across the country, selling toys, tools, sofas, clothes and everything else to the country's increasingly prosperous middle class.

But the company, long since eclipsed by retail rivals such as Walmart and Amazon, has in the past decade lost billions of dollars and closed hundreds of stores, becoming one of the most visible symbols of the fall of America's brick-and-mortar retail empires. Amazon founder Jeff Bezos also owns The Washington Post.

"This brand really lost its relevance and its reason for being. Folks no longer really knew what Sears even was," said Tom Lynch, a senior managing director at SierraConstellation Partners, a corporate restructuring firm. "When you get to that point, it's really hard to imagine turning around."

Sears struck a defiant note on Monday, likening the company to a slowing-down "marathon runner" that is "not out of the race just yet."

But the company now stands on the brink of a vast and devastating liquidation that could be one of the largest in corporate American history. If Sears again rejects Lampert's bailout bid, the company's assets would likely be chopped up and dispensed in a fire sale to help pay down its billions in debts.

Sears dominated 20th-century commerce by helping introduce generations of shoppers to mail-order catalogues and "big box" stores full of the moderately priced staples of daily life. When Sears merged with Kmart in 2005, the resulting conglomerate, Sears Holdings, became America's third-largest retailer, with $55 billion in annual revenue and 3,500 stores.

But Sears has struggled unsuccessfully to adapt to the same broad reshifting that helped upend J.C. Penney and Toys R Us: consumers' preference for shopping online. Sears has in recent years become a punchline, when thought of at all: Fewer than 1 in 10 millennials surveyed last year by the corporate-perception tracker YouGov BrandIndex said they would consider shopping there.

Lampert, a college roommate of Treasury Secretary Steven Mnuchin, had pledged that he could turn the companies' fortunes around by combining them, selling off some of their most lucrative assets and using the proceeds to recast the stores for the modern Web. "We are determined to do what is necessary to remain a competitive retailer in a challenging environment," he wrote in 2017.

But critics say that many of the company's injuries have been self-inflicted, and that Lampert's playbook has accelerated Sears' demise. In 2005, as rivals invested heavily on upgraded stores and websites, Sears spent $6 billion on a futile attempt to shore up its stock price by buying back its own shares. Sears' shares that once traded for more than $100 are now worth about 30 cents.

The late save for Lampert's rescue bid could extend his push to keep about 400 of the better-performing Sears and Kmart locations open for business. But some workers say much of the damage is already done: The stores increasingly feel like mausoleums, and many worry their next paycheck might be their last.

Dorin Matthews, an employee at Kmart's flagship store in New York's Penn Station, said company leaders are conveying almost no information to employees about what to expect, leaving many feeling shaken and afraid. She said she worries constantly about her co-workers who are disabled or senior citizens and could struggle to land another job.

"Everybody's angry right now. They want their money. The shelves are empty," Matthews said. "These people can't get their time back. They built this company. Blood, sweat and tears to help the company progress, and now the owner is turning his back."

A liquidation would imperil severance pay and other assistance for thousands of laid-off employees. Workers, some of them organized by the labor-rights campaign group Rise Up Retail, have pushed Sears to establish a financial hardship fund that would give workers a week's pay for every year of service, at an estimated cost of more than $100 million.

But Onie Patrick, who worked at a Kmart in northern Illinois for nine years before it closed in September, said the impact of the retail giant's vanishing would expand far beyond just financial damage. Her co-workers and the store's loyal customers often felt like family, she said; her fiance, whom she met in the store, proposed to her in the Kmart parking lot.

"You know how many times my grandma would give us those big chunky Sears books and say, 'Circle what you want for Christmas?' " she said. "Times change, but those are the memories we have. And it's heartbreaking to see that all go away."