The saga of the Sears bankruptcy is continuing with another lawsuit against the former chairman, Eddie Lampert, claiming that Lampert and his associates siphoned off billions of dollars in assets from the company and purposely drove it into bankruptcy. Sears stores were scattered across Rockland County and the state of New York, causing many to wonder how the chain could have failed. The plaintiff in the lawsuit, Sears Holdings Corp., is overseeing the liquidation of Sears' assets and is representing the interests of the company's shareholders.
Lampert and his company, ESL Holdings, purchased $5.2 billion of Sears' assets during the company's commercial bankruptcy at a price many assumed was an overly steep discount. Sears Holdings Corp. alleges that Lampert and his associates began to implement a plan in 2011 to sell the firm's assets at deep discounts to pay the company's operating expenses with no explicit plan to return the firm to profitability. The plaintiff also claims that but for the defendants' illegal actions, Sears would have retained enough cash to pay its third-party creditors and would have been able to avoid the disruption of bankruptcy.
Other lawsuits are also questioning the propriety of Lampert's actions as CEO. Defendants in these lawsuits, besides Lampert, include ESL President Kunal Kamlani, Bruce Berkowitz and Fairhome Capital Management and Seritage Growth Properties. Seritage acquired 266 of Sears' best stores in a 2015 spinoff; the plaintiff alleges that this transaction undervalued the assets by $649 million and left Sears with hundreds of millions of dollars in default rents.
Many pages remain to be turned before creditors and shareholders reach the last page of this saga.