Judge gives Eddie Lampert another chance to save Sears

They haven’t pulled the plug on Sears yet.

A US bankruptcy judge has agreed to give Sears Chairman Eddie Lampert and his hedge fund ESL Investments another day to sweeten their $4.4 billion bid to buy the 126-year-old department store, The Post has learned.

Judge Robert Drain is requiring ESL to deliver a revised bid along with a $120 million deposit by 4 p.m. Wednesday, of which $18 million will be non-refundable if ESL is not the winning bidder, a source with knowledge of the situation told The Post.

The hefty penalty is meant to cover the costs of the delayed offer, the source said.

The 15-minute court hearing was delayed nearly three hours as reps from ESL and Sears continued their protracted negotiations at the White Plains, NY, court house, the judge disclosed in his opening remarks, according Ana Lucía Hurtado, senior distressed debt legal analyst at Reorg.

Sources close to the proceedings had largely expected Sears to ask Judge Drain for permission to begin store liquidations as soon as Jan. 15.

While ESL won a brief reprieve, the judge left in place a plan for Sears to hold a Jan. 14 auction of its assets, in which ESL will compete against liquidation firms that would sell off the company’s inventory and assets and shutter it for good.

Four of those firms — Tiger Capital, Great American, Gordon Brothers and Hilco Global — had submitted bids but withdrew them on Friday when Sears selected two other firms, Abacus Advisors and SB360 Capital Partners, to handle its liquidation.

It’s likely that those firms will resubmit their offers at the auction, sources told The Post.

Judge Drain is also allowing ESL to submit a so-called credit bid, a controversial move that the creditors oppose. It allows ESL to partially pay for the acquisition by forgiving $1.3 billion in loans Sears owes the company.

But it doesn’t mean that he won’t rule against a credit bid at the sale auction, said David Pollack of Ballard Spahr, who represents several Sears landlords.

“The unsecured creditors will no question object to the credit bid,” said Tom Lynch, managing director of bankruptcy advisory firm SierraConstellation Partners.

All bids were due on Jan. 4, when ESL’s bid was rejected by Sears as falling short. In particular, creditors are demanding that ESL put down more cash up front, according to sources. They’re also objecting to ESL’s request to be freed from liabilities related to its past sales and acquisitions of Sears assets.

“ESL appreciates the encouragement from the court and the constructive engagement of the debtors,” a spokesperson for ESL Investments said in a statement. “Our proposal provides substantially more value to stakeholders than would be the case in liquidation and is the only option to save an iconic American retailer and up to 50,000 jobs.”