Chairman Eddie Lampert is sued by sears
Sears Holdings Corp. is suing its former chairman and biggest shareholder Eddie Lampert, alleging the billionaire stripped off the once iconic company of over $2 billion in assets.
The lawsuit, which was filed late Wednesday with all the U.S. Bankruptcy Court of the Southern District of New York, also names former Sears supervisors, such as U.S. Treasury Steven Mnuchin in addition to executives in Lampert’s hedge fund ESL.
Sears, which also operates Kmart, filed for Chapter 11 bankruptcy protection in October amid years of enormous losses and sales drops. By acquiring the resources at a court-approved auction through an affiliate ESL at 19, the business was saved by lampert. Creditors had tried to obstruct the purchase, claiming that Lampert was going to blame for the corporation’s downfall.
“Altogether, Lampert caused more than $2 billion of resources to be moved to himself along with Sears’ other shareholders and past the reach of Sears’ creditors,” the suit stated.
ESL said it”vigorously” disputes the promises and calls them”baseless” and”fanciful” in a statement emailed to The Associated Press.
“The debtors’ allegations are misleading or just flat wrong,” ESL stated, adding Sears received proceeds of over $3 billion in the transactions, all which were applied to reduce debt and finance operations.
“ESL has been a constant source of financing for Sears Holdings for many decades,” it said.
Lampert, that merged Kmart and Sears at 2005, steered Sears to Chapter 11 bankruptcy protection in October. The corporate parent of the company had 68,000 workers and 687 shops . At its peak in 2012, its shops numbered 4,000. The approval of Lampert company means approximately 425 stores and 45,000 jobs will be maintained.
Unsecured lenders, who rank at the bottom of the record to be compensated, objected to Sears’ sale to Lampert, alleging falsified fiscal projections, excessive buybacks, along with a spinoff of brands that stripped the business of key assets in a 100-plus page report filed in late January. It hastens what it called a”tortured narrative of Sears.”
Before the purchase, Lampert personally owned 31% of their Sears’ outstanding inventory, and also his hedge fund gets an 18.5% stake, according to FactSet. He stepped down in October after serving in that role since 2013