• by Thom Forbes  @tforbes, January 7, 2019

Sears is facing liquidation this morning, as a $4.4 billion offer by former CEO Edward Lampert’s ESL Holdings hedge fund has apparently not passed muster with a committee of advisers. The retailer has reportedly tapped Closter, N.J.-based Abacus Advisory Group LLC, which has already liquidated more than 800 stores for Sears since 2002, to sell off everything else if negotiations don’t resolve outstanding issues before a bankruptcy court date tomorrow, Reuters' Jessica DiNapoli and Mike Spector report.

“Eddie Lampert's proposal -- made through his hedge fund ESL Investments -- included a complex mix of new financing, previous ESL loans and the assumption of certain liabilities,” reports Nathan Bomey for USA Today. “Sears has been evaluating the offer for the last week and needed to decide by Friday whether it would give the proposal any further consideration or turn the company over to liquidators.”

Sources tell CNBC’s Lauren Hirsch that “a continuing issue is the $1.8 billion that Lampert put toward his offer by forgiving debt owed to ESL through a so-called credit bid. The restructuring committee advising Sears is not confident the bankruptcy judge will allow Lampert to use a credit bid without addressing a pending investigation about Sears transactions under Lampert's ownership.”

Hirsch adds that “Sears' unsecured creditors have said there may be claims against Sears for those deals, which include Sears' spinoff of Lands’ End and transactions with Seritage Growth Properties, a real estate investment trust Lampert created through some Sears’ properties. ESL has stressed that all transactions it did with Sears during Lampert's tenure were approved by Sears’ board.”

The Sears empire, which was the No. 1 retailer in the U.S. until the early ’90s, is now down to about 425 stores and 68,000 employees. Its once-dominant mail-order business -- the Amazon of its day -- was shuttered few months before Jeff Bezos started to peddle books online in July, 1994.

The company filed for bankruptcy in October, you may recall, in order “to accelerate strategic transformation and facilitate financial restructuring.” It said last month that it would close an additional 80 Sears and Kmart stores in 2019 on top of the 40 it had already targeted, as The Street’s Adam Smith reminds us.

“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 and other changing spending patterns,” write Bloomberg’s Eliza Ronalds-Hannon and Lauren Coleman-Lochner.

Looking ahead, “Lampert could rally yet with an improved bid before a status hearing on Tuesday. He also has a back-up plan in which ESL would pursue the purchase of some of Sears’s parts, including real estate and some of its brands,” they continue.

Looking back, “when Sears Holdings is finally dead, Lampert should be remembered as the professional investor who didn’t want to invest,” Lee Schafer writes for the Minneapolis Star Tribune. “Sears peaked long before Lampert got there, yet he’s always going to be known for its decline. His investment funds took control of Kmart more than 15 years ago, and he then engineered a 2005 merger with the even more storied American retailer Sears, Roebuck and Co., emerging as chairman of the new Sears Holdings.

“What happened next is not much. Maybe day-to-day operations improved, but there was no bold new strategy, no transformation, no winning new concept. Those things would have cost money, and Lampert didn’t want to invest.”

Forbes contributor Sanford Stein seems wistful about the direction Sears did not take: “As we watch the final stages of Sears’ unraveling, it’s difficult not to imagine what could have been had there been any real motivation to save this cultural treasure, even as recently as five years ago. Call me sentimental, but like many retail mavens, I believe there was a clear path to a real rebirth that could have meant a very different outcome for this iconic brand.”

Stein, a retail trend forecaster and founder of Retail Speak on LinkedIn, maintains that “had there been a modicum of corporate awareness, we would now be looking back on the time when ‘Sears' softer side simply died.’ It would have concluded that its only path to viability was in hard lines. A repositioned Sears would have exclusively catered to Home & Auto, period.” 

His final words, alas, are “RIP Sears.”