Sears boss may have profited, creditors say
Sears Holdings chairman and investor Eddie Lampert may have profited from the company’s plunge into bankruptcy, a group of creditors alleged Tuesday.
A committee organized to represent the retailer’s unsecured creditors in court accused Lampert and his hedge fund ESL Investments of potentially structuring deals to gain an unfair edge as the company declined.
They “may have exercised undue influence to siphon value away from the Company on favorable terms,” the creditors group said in a court filing.
The group also said Lampert may have leveraged his “insider status to obtain an ever-increasing percentage” of Sears debt, allowing him to “obtain beneficial positions” in the retailer’s Chapter 11 bankruptcy.
Sears representatives declined to comment. Lampert’s representatives were not immediately available to comment.
USA TODAY reported in June that Sears was giving Lampert and his funds about $200 million to $225 million per year in debt payments.
Lampert, who served as CEO from 2013 through the company’s bankruptcy filing last month, extended billions in financing to Sears. He also holds ownership stakes in various assets formerly owned by Sears, including valuable real estate spun off in 2015 into a real estate investment trust called Seritage Growth Properties.
The Seritage deal was particularly suspicious, the unsecured creditors group alleged. The creditors group is asking a judge to force Sears to give up documents related to the deals in question, including $2.4 billion in debt held by Lampert through his investment funds, including ESL.
Sears filed for Chapter 11 bankruptcy protection in October.