Sears creditors suggest Chairman Eddie Lampert structured deals to enrich himself

IMHO - Things may get worse for Eddie Lamprey and EEL Hedge Fund.

CNN) Sears creditors are questioning a series of deals between the company and its chairman and primary shareholder, Eddie Lampert, saying they might have been structured to benefit him rather than the company.

A committee of those owed money by Sears filed a motion in bankruptcy court Tuesday asking to be given access to documents detailing the deals, saying they are "potentially problematic." Creditors are particularly concerned about deals involving Sears and ESL, the hedge fund that Lampert owns.

"Actions taken by the company, and Lampert and ESL...suggest that the insider transactions may be part of an extended pattern of conduct that served to benefit certain (insider) equity holders at the expense of creditors and [Sears Holdings]," said the filing.

How Sears wasted $6 billion that could have kept it out of bankruptcy

Another deal the creditors are questioning is a 2015 sale of hundreds of Sears' most valuable properties to a separate company, named Seritage (SRG) of which Lampert is also chairman. The motion said the deal was done to "siphon value away from the company on favorable terms," conducted "at what appears to be discounted prices."

The creditors' motion suggests they could seek funds from ESL and Seritage in order to increase the pool of money that will be used to pay Sears' creditors as part of the bankruptcy process.

A spokesman for ESL defended all the deals with Sears, saying that Lampert did everything he could to help Sears stem losses and return to profitability.

"We have every confidence that all transactions involving ESL and Eddie Lampert are valid and enforceable, based on fair and reasonable terms," said the spokesman. "Any legal claims that attempt to challenge these transactions will have no merit and we will defend ourselves vigorously against any asserted claims."

Why Eddie Lampert stuck with Sears

All the deals were approved by independent members of the Sears board of directors, he added.

Sears declined to comment on the creditors' filing, and Seritage did not respond to a request for comment.

Lampert was the majority shareholder of Kmart and a major investor in Sears when he brought the two companies together to form Sears Holdings in 2005.

The company has struggled almost continually since then, and has not reported a profit since 2010. Lampert served as CEO from 2012 until Sears filed for bankruptcy on Oct. 15, though he remains its chairman.

Over the years ESL made at least $2.6 billion in loans to Sears Holdings, according to the bankruptcy filing. ESL made Sears back the loans with hard assets such as real estate or credit card balances. That increases the chance Lampert will be repaid while other creditors get only pennies on the dollar for what they are owed.

https://www.cnn.com/2018/11/07/business/sears-lampert-deals/index.html

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"If those businesses were still there, they would be generating enough money to cover the current losses."

Especially the credit cards. I read an article a year or two ago that said the majority of major retail chains that aren't struggling financially are only staying afloat because of their store credit card interest income.

The architect of this failure is strictly with Alan Lacy. He sold off the profitable in-house Sears credit card and over paid for Land's end. Then after he invested too heavily in other failed projects like 'The Great Indoors' ... he bailed out and laid the groundwork for Kmart & Eddie to buy Sears back in 2004 and 2005. He lied to us during several town hall meetings during that time, he told us he wasn't aware of Eddie's bid on Sears then months after that the transaction happened. After a 2 year 'merger honeymoon' period it was straight down-hill. The stock buy-backs artificially kept the stock price high then the downturn accelerated about 5 or 6 years ago. Eddie's management style and micro-managing did not help. A constant revolving door of CEO's and other VP's... no consistency, one 'hail-mary' pass after another and now here we are. But I agree you can't blame it all on EL. Put Alan Lacy on your dart board also.

Please stop lambasting Lampert. The companies' troubles started long before him. On the Sears side, selling off Dean Witter, Allstate, Homart, the credit portfolio, were all moneymakers done for short term gains. If those businesses were still there, they would be generating enough money to cover the current losses. Failure to properly integrate Lands End after its purchase. On the Kmart side, failure to keep up with Walmart pricing when they still had the chance, and not exploiting Prodigy which at the time could have kept pace with Amazon. On both sides, failure to develop a relevant wen presence.

If Lampert were not there, you would just be blaming whomever was there instead.

It doesn't take a rocket scientist to figure that out.

"Enforceable" doesn't just meant 'they already did it', it means they think they will hold up to court scrutiny without being unwound. Done doesn't necessarily mean it stays done.

I can't wait until the book comes out.How 2 iconic companies were taKen down

But we’ve known this for years. This man has been lining his pockets for a while now. Such a joke.

Valid - probably but heavily weighed against Sears/Kmart

Enforceable - well duh you already did it

Fair and reasonable - doubtful

Morally just - anything but

Eddie's been lawyered up since day one and is personal friends with the Trump administration.

At most he will get a pat on the back and a hearty handshake from Trump himself.

Lock him up!!

This thief should be in handcuffs.

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Sears creditors suggest Chairman Eddie Lampert structured deals to enrich himself

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