Sears Holdings Corp. has the gift of additional time as it looks to nail down further bankruptcy financing, WSJ Pro Bankruptcy reported. The retailer sought chapter 11 protection last week with former Chief Executive Edward Lampert’s hedge fund, ESL Investments, slated to provide a so-called junior financing package of $300 million. Since then, the company’s advisers have been contacting other potential lenders to provide a portion of the financing alongside Lampert, said Ray Schrock, a company attorney, in bankruptcy court on Thursday. The advisers haven’t only been in discussions with various lenders but are considering different financing structures, he added. Working in their favor, the clock has slowed a bit on when Sears must nail down the loan. “The company has stabilized to a large degree, and operations did much better than forecasted under the [debtor-in-possession financing] budget last week,” Schrock said yesterday. Read more.
In related news, Two Sears Holdings Corp. board directors have hired investment bank Evercore Inc. to scrutinize deals that were led by former Sears Chief Executive Eddie Lampert with the U.S. retailer before it filed for bankruptcy protection, Reuters reported. The deals, including separations of Sears’ businesses and real estate, may come under examination in bankruptcy proceedings, with creditors claiming the transactions stripped the retailer of valuable assets. Billionaire Lampert is the largest shareholder and creditor of Sears through his hedge fund, ESL Investments Inc. Sears directors Alan Carr and Bill Transier, who joined the retailer’s board earlier in October, would work with Evercore to examine the deals and decide whether there are grounds for any legal action against Lampert, according to bankruptcy-court papers filed last week. Read more.
Occupancy issues are at the heart of many significant retail cases, as detailed in the ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available at the ABI Store.
