Parent company of Sears, Kmart prepares for possible liquidation

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The reprieve came after what Sears lawyers described to a bankruptcy judge in NY as "round-the-clock" negotiations following the company board's initial rejection of Eddie Lampert's proposal, which sought to preserve 425 stores and 50,000 workers.

But at a NY bankruptcy court, Sears' lawyers told a judge that the company was prepared to consider a revised offer from Sears' chairman Eddie Lampert's ESL hedge fund.

Reuters reports the negotiations between Lampert and the company broke down over the structure of his bid, as well as the former CEO's request to not be held liable for actions he took while servicing as the company's chief executive. But many retailers end up going bust after filing, despite plans to stay in business.

It's not the first frenzied deal Sears has made during its bankruptcy.

Sears Holdings filed for bankruptcy protection last October. In recent years, Toys "R" Us, RadioShack and Sports Authority have followed that path to the graveyard.

Lampert's bid said he plans to offer jobs to 50,000 Sears and Kmart employees. After several days of "virtually round-the-clock negotiations", Sears agreed to compare a revised version of Lampert's bid at the bankruptcy auction, Schrock said.

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But it wasn't immediately clear just how much additional cash Lampert will pay for the assets.

That bid had included $1.3bn (£1bn) in financing from three institutions, ESL said in a statement. Those creditors, which include Sears landlords and bondholders, have also questioned Lampert's pre-bankruptcy transactions with the retailer.

Image: Sears has been steadily shutting stores, earmarking 262 shops for closure by February this year.

Lampert and his hedge fund argue the loans were proper and made to keep Sears alive.

If Sears doesn't accept the $4.4 billion bid, Transform Holdco said it also would bid individually on some assets, including real estate, certain intellectual property and the Sears Home Services business.