Former Sears CEO and hedge fund billionaire Eddie Lampert got his wish as a bankruptcy judge approved his $5.2 billion plan to save 425 stores and 45,000 jobs, keeping the iconic retailer alive, but many are still questioning if that will actually happen.
Jade Scipioni of FoxBusiness.com had the story:
Ray Wimer, assistant professor of retailer practice at Syracuse University’s Martin J. Whitman School of Management agrees, saying he doesn’t see how selling the stores to Lampert will help the company stay “viable into the future.”
“Sears ended up in this predicament because of his leadership over the past decade. They haven’t innovated or adapted to the changing times and are still in the same financial straits that bind their ability to change, adapt or invest in technology,” Wimer says, adding that he believes Kenmore will likely be sold and the money will go to enrich Lampert and his ESL fund and will not “used to help Sears.”
As for the 45,000 Sears and Kmart employees who now get to keep their jobs, many say they have “mixed feeling” about the news.
“I’m relieved and glad that 45,000 people get to keep their jobs, but I’m still angry. My store is still closing, there are still people that don’t have their severance. If anything I’m more resolute than ever to keep fighting,” Gabe Maquire, a seven-year associate at Kmart in North Carolina, whose store is shutting down in March, tells FOX Business.
Maquire, like others, is urging Lampert to set up a fund for all workers that lost their jobs because of store closures.
Corinne Ruff of Retail Dive reports that many believe there’s no long-term solution to what ails Sears:
According to David Wander, a bankruptcy partner at Davidoff Hutcher & Citron who attended the hearing to represent two Sears creditors, Judge Drain’s decision went on for well over an hour. “It ended with both a warning to ESL not to cause problems with the closing and post-closing issues, and a challenge to Mr. Lampert, asking if he wants his legacy to be akin to either Jay Gould or Barney Fife,” he said in an email. The references are a nod at one of the most notorious robber barons of the Gilded Age and the bumbling fictional character from the Andy Griffith Show.
“The judge also gave an advisory opinion favorable to Sears and adverse to ESL on a $166 million dispute over the contract interpretation of the asset purchase agreement, a dispute that will likely be resolved in another court,” he added.
The approval of the bid means that the ability of the unsecured creditors committee (UCC) to recover the funds it allegedly is owed, is limited to their lawsuit, Josh Friedman, global head of restructuring data at Debtwire, told Retail Dive in an email.
“It is possible, however, that this sale outcome makes it more likely that the UCC is willing to fight the litigation to conclusion, hoping to obtain a significant recovery in this case, while risking little since a plan based on this sale will provide limited recoveries for unsecured creditors,” he said.
Jennifer Calfas of Money writes that workers have a list of demands:
With the latter as their new reality, employees say they won’t stand idly by. They want accountability from management — and here’s how they’re hoping to get it.
In a letter to the bankruptcy court judge this week, employees said Lampert should meet with them “to listen to our ideas and concerns.”
One of the biggest concerns for workers in the last several months has been securing severance pay. A number of laid-off retail employees told MONEY these last several months that they stopped receiving or never received severance pay as a result of bankruptcy proceedings.
As part of Lampert’s approved bid, he included a $40 million severance pay fund that would cover “certain severance costs incurred by Sears during bankruptcy and reinstate severance benefits for eligible employees in a new company,” according to his hedge fund.
Terry Leiker, a laid-off Sears employee who worked there for 17 years, never received her severance pay after her job ended the day before the company filed for bankruptcy. Now, she’s struggling to find a new job and collecting unemployment checks.