Sears Sues Former CEO Eddie Lampert, Others for Alleged ‘Theft’ of Billions
Sears on Thursday filed a lawsuit against its former CEO Eddie Lampert and a number of its high-profile past board members, including Treasury Secretary Steven Mnuchin, for allegedly stealing billions of dollars from the retailer. Sears Holdings filed for bankruptcy this past October, after years of losses under Lampert, who was then its chairman, CEO and largest shareholder. Lampert saved the retailer from complete liquidation by buying it through Transform Holdco, an affiliate of his hedge fund ESL Investments. But Sears’ unsecured creditors repeatedly argued that Lampert was the cause of, not the solution to, Sears’ downfall. They believe that Lampert, along with Sears’ biggest shareholders, unduly benefited from deals that occurred under Lampert’s watch, including its spinoff of Lands’ End in 2014, and the carve out of many of its best properties into Seritage Growth Properties, a real estate investment trust Lampert created a year later.
Total Retail's Take: The drama surrounding Sears is seemingly never-ending. To simplify the lawsuit from Sears’ creditors, it claims Lampert stripped Sears Holdings of its most valuable assets — e.g., the spinoff of Lands’ End in 2014 — for his personal gain and at the expense of what was best for the business. The creditors are going after Lampert for repayment of money owed to them by Sears at the time of its bankruptcy filing. For Lampert, who many have blamed for the downfall of Sears, the question is whether he was ever truly invested in leading the future growth and success of Sears Holdings Co. (Sears and Kmart), or merely viewed the company as another asset for his hedge fund, ESL Investments. If you believe the company's creditors in this new lawsuit, that answer is quite apparent.