Despite continuous efforts to expand Sears Holdings like his kingdom, billionaire CEO Eddie Lampert’s fate was tortured. Under his stewardship, parent company of Sears and Kmart shut down more than 3,500 stores, cut nearly 250,000 jobs, and witnessed its share price drop from $193 a share to less than a dollar in 2007.
Bystanders in that downfall will now finally have their day in bankruptcy court in White Plains, New York on Monday February 4, CNBC reported.
According to the news reports, Sears’ unsecured creditors – individuals owed money by the company who aren’t protected by collateral – will protest Lampert in the court and air their grievances.
They are objecting to the CEO’s deal worth $5.1 billion to buy the company out of bankruptcy through his hedge fund ESL Investments, the only deal that would fend off liquidation. Over the past two weeks, a list of filings have been piled up where the unsecured creditors accused Lampert of various things including ‘stealing assets’ and ‘years of misconduct’.
Lampert, who has protected Sears from any downfall for years through his ESL investments, is the company’s largest creditor as well as its most protected with collateral.
The 126-year-old chain will have two-day hearings on Monday and Wednesday, whose fate will be decided upon by Judge Robert Drain, as reported in CNBC. He has already shown a propensity for pushing Sears and its CEO to draft a deal that would secure the jobs.
The unsecured creditors protesting Lampert include Pension Benefit Guaranty Corporation (PBGC) that guarantees the company’s pension, which is over $1 billion underfunded. They argued that Lampert’s deal to purchase Sears will object a 2015 agreement between Lampert and PBGC.
To help fill the losses of pension, Lampert offered the group royalty fees and a lien from some of Sears’ most valuable assets including DieHard, Craftsman, and Kenmore brands.
As a part of Lampert’s deal to buy Sears, the organization is arguing that he will get full access to DieHard and Kenmore, leaving it and around 90,000 pensioners empty-handed.
The unsecured creditor committee filed nearly 100-page objection against the CEO, mainly focusing on Lampert’s deals under his tenure, which include Seritage Growth Properties transactions and the company’s spin-off of Lands’ End in 2014.
For his part, Lampert will defend himself through his legal team who has argued that all transactions done under his watch were approved Sears’ independent board.