Sears Holdings and its creditors have reached a $175 million settlement agreement with former CEO Eddie Lampert and other investors that will clear the way for the retailer to execute its long-delayed bankruptcy plan. The litigation has been ongoing since 2019, when Sears accused Lampert and others of “asset stripping and ‘rank’ self-dealing.”
Lampert exited the CEO role when Sears entered bankruptcy in October 2018 and stepped down as Chairman in February 2019. After the bankruptcy filing, the remaining Sears and Kmart outlets were sold to Transformco, an entity controlled by Lampert, for $5.2 billion.
Specific allegations against Lampert and some investors include that:
- Lampert rejected a $1.6 billion bid for Lands’ End from Leonard Green & Partners and Tommy Hilfiger in favor of a spinoff that would retain his stake, which earned him at least $490 million;
- The real estate at 266 Sears stores was undervalued by at least $649 million when it was spun off to Seritage Growth Properties, then leased back to Sears with reportedly unfair terms;
- Sears shareholders received Orchard stock valued at more than $100 million from the 2011 spinoff, but Sears itself was paid nothing.