Bankrupt retailer Sears is facing the reality that it may have to liquidate if a deal with former CEO Eddie Lampert falls through.
The once-iconic department store chain is in talks with New Jersey-based Abacus Advisory Group to take on the potential liquidation initiative, Reuters reported on Monday, citing people familiar with the situation. The role of a liquidator is to look into finances, causes of failure and investigate possible offenses.
If liquidation is the outcome, Sears’ business will close down – meaning it will cease to exist – and its assets will be sold to repay creditors as much as possible. About 68,000 employees would be out of a job. Store merchandise would be sold, as well as real estate assets and businesses.
Sears could stand to get a cut of what liquidators sell, according to a report from CNBC, as opposed to a fixed payment.
Meanwhile, Lampert attempted to cobble together a $4.4 billion rescue package, though board negotiations to decide whether the bid was acceptable ran – publicly unaddressed – through a Friday deadline. Lampert, through his hedge fund ESL Investments, is hoping to keep 425 stores open and salvage 50,000 jobs.
On Tuesday, Sears has a hearing scheduled in bankruptcy court. If the board does not accept Lampert’s proposal it will likely need to ask the court for permission to begin the liquidation process.
Sears filed for bankruptcy in October and has since shuttered hundreds of stores as it attempts to restructure and return to profitability. As part of its bankruptcy deal, the once iconic retail chain said it would close more than 170 of its 700 stores by the end of the year. Last month, Sears announced plans to shutter an additional 80 store locations in March.
At its peak, Sears operated nearly 4,000 stores.
Sears has been spinning off profitable brands – like Craftsman – to keep it afloat throughout a restructuring process.
The retailer – once the country’s largest – has not posted a profit since 2012.