Sears Holdings Reaches Bankruptcy Settlement Agreement With Former CEO
While driving by an older mall location, do you ever wonder what happened to Sears? Well, after four years of bankruptcy proceedings, Sears Holdings and its creditors have reached a settlement with former CEO and majority shareholder Eddie Lampert and other investors. According to news sources, on Aug. 10, the parties reached a $175 million settlement agreement that could resolve years-long litigation filed against Lampert and other defendants in 2019 over allegations of “Asset stripping” and “Rank” self-dealing.
In the original lawsuit, Sears Holdings claimed Lampert and other investors were “Woefully insolvent by billions of dollars” by the time the company filed for bankruptcy in Oct. 2018.
“Instead, the debtors’ insolvency and the inevitable bankruptcy filings were the result of a years-long effort by Lampert in concert with and assisted by other defendants to transfer billions of dollars of Sears’s assets for his benefit and the benefit of other Sears Holdings shareholders in exchange for grossly inadequate consideration or no consideration at all.”
The lawsuit also claimed that Lampert used Sears and its prime assets to improve his personal, and his investment fund’s, bottom line-despite the harm it caused to the retailer.
“Altogether, Lampert caused billions of dollars of cash and other assets to be transferred to himself, Sears Holdings’s other shareholders and other third parties,” the lawsuit alleged.
These assets included 100% of Lands’ End, Inc., a profitable Sears business that, at the time of its transfer to Lampert’s namesake hedge fund ESL Investments Inc., had an enterprise value of $1.3 billion.
“In addition to these asset transfers, from 2016 to 2018, Sears Holdings and other debtor plaintiffs paid more than $400 million in ‘interest’ and ‘fees’ on account of ‘loans’ made by Lampert, his affiliates and others,” the complaint added. While the settlement reached this week doesn’t come close to the amount of money Lampert was alleged to have stripped from Sears Holding Corp., it will bring an end to the drawn-out proceedings. Sears Holding Corp. first filed for Chapter 11 bankruptcy protection in Oct. 2018 after failing to turn a profit since 2010.
Just like Sears stores used to be, disputes can be found EVERYWHERE! And when those things negatively impact YOU and/or YOUR business including bankruptcies, landlord/tenant matters including unlawful detainers, contract issues, nuisance ADA claims and even collections, call in your good guy business litigator, Dean Sperling to resolve YOUR matter with YOUR best interests in mind!
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