SEARS SUIT SPECIAL

Lampert ‘stripped’ assets

Sears filed an explosive lawsuit against Eddie Lampert on Thursday, accusing the hedge fund billionaire of looting the retailer’s prize assets even as he ran it into the ground.

In a 110-page suit that also names Treasury Secretary Steven Mnuchin — a former roommate of Lampert’s at Yale who was a Sears board member from 2005 to 2016 — the bankrupt retail icon said Lampert (inset) and his cronies concocted an elaborate “cover up” to hide their asset “stripping.”

The big deception, according to Sears: Lampert said he had a plan to return the retailer to profitability — when, in fact, no such plan existed.

In addition to Lampert and Mnuchin — who also worked together at Goldman Sachs years before Lampert’s hedge fund ESL took control of Sears and Kmart in 2005 — the suit names board member Thomas Tisch and Fairholme Capital Management, the hedge fund run by Bruce Berkowitz, who left the board last year as he accused Sears of “wrecking” his portfolio.

All of them were involved in spinning off five major assets worth more than $2 billion, including Lands’ End and Sears Hometown and Outlet Stores, now off limits to Sears’ creditors, the suit says.

Lands’ End in particular could have enriched Sears investors if Lampert hadn’t spurned a $1.6 billion buyout offer from Tommy Hilfiger and Leonard Green & Partners, according to the suit.

Instead, Lampert handed shareholders a $500 million dividend before spinning off Lands’ End for $1 billion, with his hedge fund alone getting nearly half that sum.

“ESL Investments, Inc. vigorously disputes the claims,” Lampert’s fund said in a statement, describing the suit as “fanciful.”

The lawsuit comes as Sears and ESL squabble over mounting professional fees in the bankruptcy — including those of the attorneys and financial advisers — which add up to $85 million through February, according to court documents.

That total has likely blown past $100 million by now, since the company filed for bankruptcy protection on Oct. 15, according to industry experts.

White-shoe law firm Weil Gotshal & Manges submitted a bill this week for $40 million through Feb. 28, court filings show. Akin Gump, which represents the unsecured creditors, has billed the company for $21.6 million for its services through February.

“The complaint is a play to get Lampert to write a big check that he says he doesn’t owe Sears,” said Mark Cohen, a former chief executive of Sears Canada who’s now director of retail studies at Columbia Business School.

“At the end of the day, if it can’t pay its bankruptcy-related costs, it can’t get out of Chapter 11 and Lampert can’t take possession,” Cohen said.