Craftsman, Lands’ End sales could unravel

Sears Holdings warned that the recently announced sale of its Craftsman tool brand could fall apart if the ailing departmentstore chain goes broke by the time the deal is ready to close.

The company said in a public filing Tuesday that the sale of Craftsman to Stanley Black & Decker could be “voidable, in whole or in part” if a court determines that Sears was insolvent at the time of the deal close or became insolvent because of it, among other conditions.

Sears, in a blog post Wednesday on its site, said that it was required to make the disclosure on its site because of “historical performance,” but that it is not in imminent danger of going out of business as it executes its turnaround strategy.

The Craftsman sale, a deal valued at about $900 million, was announced in January and completed March 9. Other recent transactions, including Sears’ 2014 spinoff of Lands’ End, could also be unraveled if the company is deemed to have been insolvent at the time, Sears warned.

The warnings stem from laws that require bankruptcy judges to examine recent transactions in which debtors shed assets to determine whether those deals unfairly extracted value that otherwise would have gone to senior creditors.

If the deals were deemed to violate “fraudulent conveyance and transfer laws and legal capital requirements,” the buyers of Sears assets could be required “to turn over value to other entities involved in the transaction and contemplated transactions for the benefit of unpaid creditors,” Sears said in the filing.

A Stanley Black & Decker spokesperson did not respond to a request seeking comment Wednesday.