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Lampert’s ESL is Gearing Up for Next Week’s Court Date on Sears

ESL Investments, the hedge fund run by Edward S. Lampert that is hoping to acquire Sears Holdings Corp. for $5.2 billion, has filed its legal papers showing why it should prevail.

The hedge fund reiterates its commitment to Sears, said it has cooperated with the unsecured creditors committee’s probe into past dealings between it and Sears, and said the transaction will maximize value for Sears’ estate. It’s also trying to persuade the bankruptcy court that the process for the sale was fair, and that the business plan positions the retailer to succeed after it emerges from bankruptcy court proceedings. One point it noted was that a sale hearing is about whether ESL has the highest or best bid on the table, and will provide the debtors with more value than any other alternative, including liquidation. ESL also said the sale hearing is NOT about whether the debtors will or will not be administratively insolvent after the transaction closes, even if that result is highly likely.

Sears chief financial officer Robert A. Riecker, said he’s worked on the plan’s preparation, which includes monitoring the company’s progress, reviewing the data and assessing whether the numbers provided were achievable. He also emphasized that neither Lampert—who is also Sears’ chairman—nor anyone at ESL, had any input or even assisted with the preparation of the plan. Of course, Sears has a vested interest-the company chose ESL’s $5.2 billion as the best one on the table as a going-concern offer. It didn’t hurt that ESL was the only bidder, negotiating with Sears on the terms of the offer.

And then there are legal filings by others, mostly duplicating the concerns of the Sears unsecured creditors committee and the government pension watchdog, the Pension Benefit Guaranty Corp. They oppose the sale, citing past transactions between Sears and ESL as representing a conflict of interest and that those deals benefited ESL. That’s even though both sides had their own advisors who gave the nod for the deals to proceed.

A hearing is set for Monday in a bankruptcy court in White Plains, and could last for a few days.