What is the EXACT relationship between the parties and how is it legal?
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I don't think that we will ever know for sure what Eddie Lampert's original intentions were. I suspect it was along the lines of attempting to do something that few had done before & come out successful. It probably became more difficult than he had anticipated.
Those pesky Sears stores with all those loyal associates became a stumbling block. Why didn't they just leave? He would have. Additionally the public sentiment of growing up with and feeling a fondness for Sears limited him PR-wise from shutting the whole thing down, selling off the venerable brands, and just using the real estate all at once.
Finally the combination of older/immigrant Sears shoppers not buying over the internet and having a poor functioning website kept the business from becoming asset light at the pace he planned.
Transformations are tough when you talk out of both sides of your mouth. You aren't truthful with your stores or corporate office that you're shutting down and you're lying to your investors a la Berkowitz's that it's all about real estate value.
The interesting things to me is: Only one man is behind all this yet many SHC workers and supposed investment savvy types like Berkowitz wanted to believe the scenario that best suited them for so long that this mess is where we are in 2018.
@1yqw, not sure if your post was tongue and cheek or if you are serious. However, Eddie never intended to turn Sears around. Eddie was a hedge fund manager and never wanted to be a retailer. He saw value in SHLD. Value like Craftsman, Die Hard, Lands End, Kenmore and real estate. His intention was to become rich like Warren Buffet, Donald Trump who by the way did the same thing with Alexanders and Two Guys, it seems like a plan from a similar playbook.
To Eddie business is business, its not personal, right? Eddie is out for himself none of his moves are for the benefit of others. He views others as a means to get himself where he wants to be, in other words people are to be used and disposed of according to his best interest. To think otherwise is giving him credit he doesn't deserve. But hey, it's a free country you can think what you like, but if you decide to ever put your trust in him, be careful, he does bite, just as his good buddy Berkowitz found out.
@lta, don't know about the legalities, it's too complicated for me however I think there was a lawsuit and it was settled for about 40 million, but I would have to google it and read about it to know for sure. And when the time for bankruptcy comes there may still be some lawsuits. A lot of business shananigans and corruption that is allowed to go on is staggering.
I may not be uber wealthy but I'm content with what I have and live my life to decent morals and standards. I wouldn't want to deal with those negative attributes about myself on my deathbed.
Who Killed Sears? 50 Years on the Road to Ruin - https://www.investopedia.com/news/downfall-of-sears/
Sears was not bankrupt in 2004.
@idsk seriously though, what part of ESL’s explanation is factually incorrect?
Eddie Lampert is a modern day Oskar Schindler!!
@1yqw - Your revision of Eddie's history is almost Orwellian!
ESL has to be sarcasm, right?
with a story like that, you should be working in the White House. You'd fit right in. Wow.
Edward Lampert purchased failing kmart and turned it around. Then he made his first mistake and bought failing bankrupt Sears.
After taking it over he made some money as the stock soared. However after diving into the books he realized the situation was far worse than it appeared. Yes, sears stores were clean and nice but they were just A facade. He poured billions of his own money into the two companies trying to make it work.
In order to stave off bankruptcy and save 200k American jobs during very difficult times he formed another company, Seritage - in Seritage he took more of his own money and gave it to sears in exchange for very tired worn out sears and kmart stores, which he then rented back to the company for a rent way below market rate (like $4 a square foot instead of $16-$20)
In so doing sears was able to keep many ungrateful associates employed and order more inventory etc. even though he lost a fortune, he did it because he cared. Eventually some of the stores were closed and rented to others because the stores continued to fail, and Eddie knew he would only had enough money left to save some.
Eddie Lampert is not getting rich from all this, he already was rich and would be even richer had he fired all of you years ago and liquidated.
His mother used to work retail and so he wanted to honor her and try to keep the Grand old Sears name alive. All he did was lose Billions, yes he will be ok, but don’t say he got rich from it, not even close.
Eddie and Bruce owned over 80% of the company so they could do what ever they wanted. Not illegal.
@hng yes, well said. How is this legal? How or why would politicians, rule makers or even the greedy capitalists allow this? This shady activity surely undermines them all?
@hng- Exactly what you said. Nicely done.
What cave have you been living in? This is a layoff site, try google.com
I think it is something like this;
Eddie pulled valuable Sears real estate and put it into a REIT called Seritage. Then he loaned SHLD money and used the Real Esate as collateral. When Sears couldn't pay Eddie his loan payments, Eddie got to keep the valuable real estate. Each time Eddie loans SHLD money he does so at high interest rates earning himself quite a bit of money. When SHLD declares bankruptcy he will be first in line as a creditor to be paid back. No matter what happens Eddie wins.
Yup. Kmart and Sears have always been just a big fat pile of real estate to the man.
It shouldn't be legal but I assume it is. If it's technically not, he is still doing it & getting away with it. I couldn't do it but I'm not Eddie Lampert. I believe that you can be financially comfortable and keep people in their jobs. I could never look at a workplace as the way to squeeze $$$ for myself while ruining lives.
Google it.