Sears Prepares for Possible Liquidation as ESL Bid Fails

(Bloomberg) -- Sears Holdings Corp. is preparing to potentially wind down the iconic retailer after Chairman Eddie Lampert’s bid to buy several hundred stores out of bankruptcy fell short of bankers’ qualifications, people with knowledge of the matter said.

The retailer started laying the groundwork for a liquidation after meetings Friday in which its advisers weighed the merits of a $4.4 billion bid by Lampert’s hedge fund to buy Sears as a going concern, said the people, who asked not to be identified because the discussions are private. If the 125-year-old retailer does die in bankruptcy -- like Toys “R” Us in 2018, and Borders Group Inc. in 2011 -- it would mark the largest fatality yet in the retail apocalypse prompted by a shift to online shopping.

While Lampert’s ESL Investments has failed to convince the bankers of the viability of its bid, it could still make last-minute improvements before a status hearing on Tuesday. Lampert also has outlined a back-up plan in which ESL would pursue the purchase of some of Sears’s parts, including real estate and intellectual property, such as its brand.

Spokesmen for Sears and ESL declined to comment, as did a representative for Lazard Freres & Co., which is advising Sears.

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