Sears creditors: Lampert and his hedge fund lining "own pockets"
A group of Sears creditors are challenging Chairman Eddie Lampert's hedge fund's winning $5.2 billion bid to buy what remains of the business. It's asking for a day in court to air grievances.
Sears confirmed Thursday that Lampert's hedge fund won tentative approval for the plan to buy 425 stores and the rest of its assets. The move preserves 45,000 jobs and is subject to court approval on Feb. 1 and is expected to then close Feb. 8. Just over 500 Kmart and Sears stores remain open, but liquidation sales are already in the works at 80 of those stores, and Lampert's proposal involves running 425 stores.
In a court filing Thursday, Sears creditors contend Lampert is portraying himself as the company's potential savior, after years of actions that benefited him and his hedge fund ESL Investments, at the expense of Sears and its workers.
"ESL's bid to 'save the company' is nothing but the final fulfillment of a years-long scheme to deprive Sears and its creditors of assets and its employees of jobs while lining Lampert's and ESL's own pockets," the filing says.
The committee of unsecured creditors, which rank at the bottom to get paid, has been critical of Lampert since Sears filed for Chapter 11 bankruptcy protection in mid-October, and has been pushing for liquidation.
Lampert's story
Lampert has been selling off some of Sears' most prized brands, including Craftsman. The company also spun off Lands' End. Four years ago, it created a real estate investment trust to extract revenue from its properties. It sold and leased back more than 200 properties to the REIT, in which Lampert is a significant stake holder.
ESL said in a statement to CBS MoneyWatch that all transactions injected much needed cash into the business, were done in good faith and were also approved by the company's board, including independent directors.
"Over the past several months, we have provided countless pages of documents to the Creditors' Committee and held numerous discussions with their advisors," the statement said. "We have cooperated fully with their review and remain confident that the processes we followed are unimpeachable. We reject any assertion to the contrary and will vigorously contest any effort to assert claims against ESL, its principals or affiliates concerning these transactions."
Lampert said in a recent statement to the Associated Press: "For as long as I have been involved with Sears, I have cared deeply about the company, its associates and the people they serve. While the opportunity I saw from the start for Sears to benefit from the disruptive changes in retail and technology has not worked out so far, it is still there to be taken. Every transformation involves perseverance and risk, but I am hopeful that we can execute better and faster on the smaller platform we are bidding on. ... There is every reason to fight for its future."
A spokesman for Sears Holding Corp. declined to comment on the creditors' challenges to the bid.
Lampert was the only one to put forth a proposal through an affiliate of ESL to rescue the floundering company in its entirety. He had sweetened his bid multiple times.
Still, many experts believe a smaller version of the iconic, 126-year=old retailer will not be viable as it faces increasing competition from the likes of Amazon and Walmart.
"The company has been on a death spiral for well over a decade," former Sears executive Mark Cohen said in a recent interview with "CBS Sunday Morning."
Sears' Hoffman Estates, Illinois-based corporate parent, which also owns Kmart, had 687 stores and 68,000 employees at the time of its bankruptcy filing. At its peak in 2012, its stores numbered 4,000.