In this Feb. 13, 2012 photo, a worker repairs the Sears sign outside the Sears Grand store in Solon, Ohio. Sears Holdings said, it will separate its smaller hometown stores, outlets and some hardware stores in a deal expected to raise $400 million to $500 million as it seeks to regain profitability and market shareEarns Sears, Solon, USA

The fight for Sears Hometown and Outlet stores continues.

But there’s a new twist: Now Sears Hometown and Outlet Stores, the company that spun off of Sears Holdings Corp. in 2012, might be facing liquidation.

Last week, Transform Holdco, which was formed by Edward S. Lampert and his hedge fund ESL investments when Lampert bought Sears out of bankruptcy earlier this year, placed a bid on the remaining shares of Sears Hometown and Outlet Stores.

Lampert, who was chief executive officer and chairman of Sears in 2012 when Sears Hometown and Outlet Stores spun off into its own company, owns 58 percent of Hometown and Outlet Stores by way of his hedge fund ESL Investments and its affiliates. ESL is also the majority owner of Transform Holdco, that company that bought Sears Holdings Corp. out of bankruptcy.

The new bid for Sears Hometown and Outlet Stores offered $2.25 a share for its remaining common stock. In a Schedule 13D filing with the U.S. Security and Exchange Commission, Transform said this was a 23.6 percent premium to Sears Hometown and Outlet Stores’ average share price the five trading days before the offer was made.

Even so, according to regulatory documents, “representatives of [Sears Hometown and Outlet Stores] communicated to representatives of Transform Holdco and the reporting persons that the special committee of the board formed to evaluate the offer was unable to conclude that a transaction on the terms proposed in the offer letter would be in the best interest of [Sears Hometown and Outlet Stores’] stockholders unaffiliated with the reporting persons.”

Negotiations between Transform and the Sears Hometown and Outlet Stores continued through Friday — but Sears Hometown and Outlet Stores was considering liquidating.

A regulatory document filed on Monday said Lampert addressed the board, showing “his opposition to any dissolution of the Hometown segment, given the risks he believed continuing as an Outlet-only business would pose to [Sears Hometown and Outlet] and its stockholders.”

In the regulatory filing, Lampert and ESL asked the SEC to remove two members of the Sears Hometown and Outlet Stores board: William Phelan and David Robbins.

Lampert and ESL sent a letter to Sears Hometown and Outlet Stores shareholders and board members, explaining their decisions and recommended two new faces to the board: Alberto Franco and John Tober. Franco is a senior advisor to Cyrus Capital Management, an investment company. Tober is chairman and ceo of CertaTech Solutions, a technology firm.

“ESL disagrees with any decision by the board of directors of Sears Hometown and Outlet Stores Inc. to liquidate the Hometown business without consultation with and support of the company’s shareholders,” according to a statement released by ESL. “Any decision to liquidate the Hometown business would have a negative effect on Hometown owners and their families, who have supported the company for more than 25 years, along with their employees and the communities that they serve. ESL was compelled to take these actions after it was unable to reach a reasonable agreement with a special committee of the company’s board to reconsider the liquidation of the Hometown business, a step we believe would diminish the company’s overall value and leave the residual company at risk.”

The spin-off of Sears Hometown and Outlet stores was an attempt to increase profitability for roughly 1,100 Sears Hometown stores nationwide that sold hardware and appliances, and 122 Outlet stores that sold Sears merchandise, including apparel, appliances, gardening equipment, sporting goods and electronics, at discounted prices.

The web site reads “Sears Hometown and Outlet Stores Inc. is not part of the bankruptcy filing by Sears Holdings Corporation,” and continues in bold letters, “It remains business as usual at Sears Hometown and Outlet Stores.”

But Sears Hometown and Outlet Stores stock is down nearly 90 percent since May 2014. Shares of Sears Holdings Corp. was down roughly the same when it filed for Chapter 11 bankruptcy last October.

Sears Hometown and Outlet Stores could not be reached for comment.