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Sears sues Lampert, claiming he looted company and drove it into bankruptcy

Published: April 18, 2019
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Source: Reuters

NEW YORK (Reuters) - Sears Holdings Corp sued longtime Chairman Eddie Lampert, his hedge fund ESL Investments, and former directors including Treasury Secretary Steven Mnuchin, accusing them of allowing the retailer to be looted of billions of dollars before its October 2018 bankruptcy.

The lawsuit, made public on Thursday, was filed by the restructuring team winding down what remains of the pre-bankruptcy Sears following Lampert’s $5.2 billion purchase in February of most of its assets.

Sears accused Lampert of ordering the creation of bogus financial plans showing the retailer would turn itself around even as it racked up huge losses, enabling the transfer of five major assets including Land’s End and Sears Hometown Outlet for his benefit.

 

“Had defendants not taken these improper and illegal 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,” the complaint said.

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Sears Holdings corporation announced on Thursday that it has accepted a $5.2 billion bid by Chairman Eddie Lampert's ESL Investments, preserving approximately 45,000 jobs upon approval. 

Sears Chairman Eddie Lampert has gone back to the drawing board in his bid to save the company from liquidation, emerging with a revised package of around $5 billion, according to CNBC.

Barack Obama recently stated that anyone that is claiming that America’s economy is in decline is “peddling fiction“.  Well, if the economy is in such great shape, why are major retailers shutting down hundreds of stores all over the country?  Last month, I wrote about the “retail apocalypse” that is sweeping the nation, but since then it has gotten even worse.  Closing stores has become the “hot new trend” in the retail world, and “space available” signs are going up in mall windows all over the United States.  Barack Obama can continue huffing and puffing about how well the middle class is doing all he wants, but the truth is that the cold, hard numbers that retailers are reporting tell an entirely different story.Sears is an icon of American retail. It’s been around since 1893 and served as a staple for many consumers for much of that time. But in recent years, under the stewardship of CEO Eddie Lampert, it’s turned into a money pit. Today, it announced a quarterly loss of more than $500 million. Last quarter, it lost more than $400 million. And the long-running decline is accelerating.

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