Sears has won a reprieve in a desperate attempt to stave off its own demise. The company's largest shareholder and chairman, Eddie Lampert, won a bankruptcy auction in New York, per a source familiar with negotiations. Lampert had upped his bid to more than $5 billion in recent days, the AP reports. Lampert, who steered the company into bankruptcy protection, may be able to keep the roughly 400 remaining Sears stores open, which would mean tens of thousands of jobs are saved, at least for now. Whether Sears, founded 132 years ago, can survive in the era of Amazon remains questionable. Sears filed for Chapter 11 bankruptcy protection in October. At that time, it had 687 stores and 68,000 workers. At its peak in 2012, its stores numbered 4,000. Lampert says there's still potential for the firm even as it struggles to compete not only with Amazon, but Walmart, Target, and dollar stores.
Lampert personally owns 31% of the Sears' outstanding shares, and his hedge fund has an 18.5% stake, per FactSet. He stands to realize a big tax gain keeping Sears alive, using the company's years of net operating losses to offset future taxable income if one of his other companies takes over the chain, says David Tawil, president and co-founder of Maglan Capital. Tawil and others believe Lampert wants to be in full control of liquidating Sears' assets, including real estate. Lampert combined Sears with Kmart in 2005, about two years after he helped bring Kmart out of bankruptcy, and pledged to return Sears to greatness; that never happened. The company, hammered during the recession and outmatched in its aftermath by shifting consumer trends and strong rivals, hasn't had a profitable year since 2010 and has suffered 11 straight years of annual sales declines. (Read more Sears stories.)