NEW YORK (AP) – As Sears tears on the brink of collapse, a man is at the center of the struggle for the future of iconic dealer future.
Eddie Lampert plays several often conflicting roles in what could be the last chapter of the company that began as a mail order company 132 years ago. He has been chairman, CEO, lender and largest shareholder – all at the same time. And he stands to win big if Sears survives.
Sears & # 39; fate – and its Kmart brand – could be decided Monday in a law firm conference room high above Manhattan, one block from Central Park. There are those who owe money from Sears, Lampert's last plan to preserve 425 stores and 50,000 jobs at a bankruptcy auction.
Lampert, the only one proposing to save the floundering company in its entirety, has bid for Sears for more than $ 5 billion and added a $ 120 million cash deposit through an associated ESL hedge fund. His original $ 4.4 billion bid was rejected by the company's board.
He has publicly stated that he will save Sears, who filed for protection of Chapter 11 in October, saying he believes that there is still potential for the company despite its past and lacking efforts to reverse it around.
"As long as I've been involved in Sears, I've been deeply concerned about the company, its employees, and the people they serve," Lampert said in a statement sent via ESL to The Associate Press. "While the opportunity I saw from the outset that Sears could take advantage of the disruptive changes in retail and technology has not worked so far, it is still there to be taken. Any transformation involves endurance and risk, but I hope That we can do better and faster on the smaller platform we offer. There is every reason to fight for its future. "
But many others believe that pure financial gain lies behind his persistence.
He stands to realize a great tax advantage if he keeps Sears alive by using the company's net operating losses to offset future taxable income if one of his other companies takes it over, says David Tawil, chairman and co-founder of Maglan Capital, who follows distressed companies. Tawil and others also believe that Lampert will buy the company so that as the only shareholder he can control the liquidation of the remaining assets.
Some will argue that he has been doing it all the time by selling some of Sears most sought after brands like Craftsman. The company also beat Lands & # 39; End. ESL has maintained that all shareholders of Sears have benefited from these moves because it injected much-needed liquidity into the company.
Four years ago, the company created a real estate investment fund to extract revenue from its properties. It sold and rented back over 200 properties to REIT, where Lampert is a significant stakeholder. ESL said Sears had an immediate inflow of $ 2.7 billion. In capital from these transactions.
"This company has been insolvent for years, except that he has played these games," said Steve Dennis, a strategic retail consultant of various senior positions at Sears for 12 years until 2003.
If Sears goes to liquidation, Lampert would be vulnerable to any legal claims arising from offers he had previously made to sell some of the company's assets, another reason why he might be trying to evade that result, according to H. Jeffrey Schwartz , head of the law firm McKool Smith PC, which represents several Sears suppliers.
"He wanted to be a fair game," Schwartz said.
Many of the retailer's unsecured creditors, which include suppliers and landlords, push for liquidation because they believe that Sears is more dead than alive. They also believe there is value in litigation against Lampert, says David Wander, a lawyer at Davidoff Hutcher & Citron, who represents two Sears suppliers.
In an application at the end of December, ESL said that creditors have no reason to sue hedge funds have expanded more than 2.4 billion. $ of secured funding approved by Sears & # 39; Board of Directors and a committee of independent directors that allow the company to continue operations.
Sears & # 39; Fate has been twisted in the wind for years, but since its bankruptcy application, its death has emerged imminent. At the peak of 2012, its stores were number 4,000, far from the just under 700 stores and 68,000 workers it had from October.
Suppliers who kept Sears in a tight leash for many years are now reluctant to continue doing business, leaving their physical stores with bare shelves and giving customers some reason to go. The company has not had a profitable year since 2010 and has suffered 11 equal annual annual sales drops.
Lampert, who has no formal background in retail, has been criticized for cutting costs and not investing in stores. Dennis says that Lampert never had a convincing vision for Sears as a business or showed any interest in maintaining jobs throughout his employment.
The 56-year-old billionaire stays out of the public for the most part, rarely visits the company's stores or even headquarters apart from annual board meetings, according to a former head of Sears Mark Cohen, now director of retail studies at Columbia Business School.
"He has no physical and personal connection to the company in any conventional sense," Cohen said. "He controls via video conference."
Many analysts believe that even though Lampert has Monday's auction, Sears will not have much of a future and will probably linger together for just one year.
However, Lampert still has much more to gain. "
" "He has really created a very nice web of complexity for the company," said Neil Saunders, managing director of the research firm GlobalData Retail. "He is in a much better position to get something out of this than anyone else part. "