Report: Sears sues Lampert
In a lawsuit filed Thursday, Sears Holdings Corp. sued its former CEO Edward Lampert, among others, claiming he enriched himself at the expense of the company.
The 109-page complaint claims that Lampert and other defendants, including Steven Mnuchin – a current U.S. Secretary of the Treasury and former vice chairman of Lampert's ESL Investments – “transferred billions of dollars of the company’s assets to its shareholders for grossly inadequate consideration or no consideration at all.” The suit was filed in the U.S. Bankruptcy Court for the Southern District of New York by Sears acting at the direction of the restructuring committee of the board of directors of Sears.
The complaint points to five allegedly improper asset transfers, beginning in 2011 with Orchard Supply Hardware, Sears Hometown and Outlet Stores, and Sears Canada. Other transactions involved Lands’ End and Seritage, the real estate investment trust created in 2015.
The deals, according to the lawsuit, were part of a plan to strip Sears of its most valuable assets for the benefit of the defendants – Lampert, ESL and Sears’ other shareholders – “to the great detriment of the company and its creditors.”
The complaint said: “Had defendants not taken these illegal and improper actions, Sears would have had billions of dollars more to pay its third-party creditors today and would not have endured the amount of disruption, expense, and job losses resulting from its recent bankruptcy filing.”
Lampert's ESL Investments purchased Sears assets out of bankruptcy in February for $5.2 billion, thus keeping the company in business.
ESL denied the claims of the complaint: "We are confident that the processes we followed for each of these transactions are unimpeachable. We reject the debtors’ allegations and will vigorously contest their complaint concerning these transactions.”
The 109-page complaint claims that Lampert and other defendants, including Steven Mnuchin – a current U.S. Secretary of the Treasury and former vice chairman of Lampert's ESL Investments – “transferred billions of dollars of the company’s assets to its shareholders for grossly inadequate consideration or no consideration at all.” The suit was filed in the U.S. Bankruptcy Court for the Southern District of New York by Sears acting at the direction of the restructuring committee of the board of directors of Sears.
The complaint points to five allegedly improper asset transfers, beginning in 2011 with Orchard Supply Hardware, Sears Hometown and Outlet Stores, and Sears Canada. Other transactions involved Lands’ End and Seritage, the real estate investment trust created in 2015.
The deals, according to the lawsuit, were part of a plan to strip Sears of its most valuable assets for the benefit of the defendants – Lampert, ESL and Sears’ other shareholders – “to the great detriment of the company and its creditors.”
The complaint said: “Had defendants not taken these illegal and improper actions, Sears would have had billions of dollars more to pay its third-party creditors today and would not have endured the amount of disruption, expense, and job losses resulting from its recent bankruptcy filing.”
Lampert's ESL Investments purchased Sears assets out of bankruptcy in February for $5.2 billion, thus keeping the company in business.
ESL denied the claims of the complaint: "We are confident that the processes we followed for each of these transactions are unimpeachable. We reject the debtors’ allegations and will vigorously contest their complaint concerning these transactions.”