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Lampert Gets Nod From Pension Watchdog in Bid to Keep Sears Alive

Edward S. Lampert has a big win after Sears Holdings Corp. reached a settlement with the government’s pension watchdog, which in turn is now backing his hedge fund’s $5.2 billion bid to acquire the bankrupt retailer.

According to testimony at the bankruptcy court hearing Thursday, Sears’ attorney told the judge that the retailer and the Pension Benefit Guaranty Corp. (PBGC) have settled their $1.7 billion dispute. That in turn has the PBGC now backing Lampert’s ESL Investments’ bid to acquire the company as a going concern. But Lampert still faces opposition from other unsecured creditors. The Wall Street Journal first reported on the settlement with the PBGC on Thursday.

The PBGC, which had vehemently opposed the sale before the settlement with Sears, is also a member of the unsecured creditors committee in the Sears bankruptcy. Other members of the committee have been pushing for a liquidation, arguing that Sears is worth more now as a dead company than it will be later on should the going-concern business model eventually fail. The concern is that a Lampert-controlled Sears without any other oversight would just result in a continuation of what has been termed a slow-moving liquidation of the retailer.

But it was also learned during court testimony earlier this week that if someone from ESL is named CEO, financial institutions providing financing to a reorganized Sears can put in place a chief restructuring officer to provide broad oversight to the retailer’s operations.

Meanwhile, court testimony continues before U.S. Bankruptcy Judge Robert Drain in White Plains. He has said that he would rule either immediately from the bench or shortly thereafter once testimony is completed.

Sears had said on Monday that it hoped to close on the deal with Lampert on Friday.