USA Today reports that former Sears CEO/chairman Eddie Lampert, whose hedge fund bought the chain’s assets out of bankruptcy, has asked a federal judge to release him from an agreement that he would pay severance up to $43 million to former Sears employees.
According to the story, “The agreement applied to workers who lost their jobs from the day Sears filed for bankruptcy in October through February, when Sears assets were sold to Lampert in a last-minute deal. The company closed hundreds of stores during that period.”
USA Today writes that “in a court filing, Lampert's representatives accused Sears Holdings of failing to deliver ‘hundreds of millions of dollars of assets’ it had promised as part of the deal to save the company from total liquidation. Those assets were earmarked to make the severance payments.”
The move comes as Sears Holdings has sued Lampert’s company, accusing it of “engaging in a scheme to strip the company of assets over time.”
According to the story, “The agreement applied to workers who lost their jobs from the day Sears filed for bankruptcy in October through February, when Sears assets were sold to Lampert in a last-minute deal. The company closed hundreds of stores during that period.”
USA Today writes that “in a court filing, Lampert's representatives accused Sears Holdings of failing to deliver ‘hundreds of millions of dollars of assets’ it had promised as part of the deal to save the company from total liquidation. Those assets were earmarked to make the severance payments.”
The move comes as Sears Holdings has sued Lampert’s company, accusing it of “engaging in a scheme to strip the company of assets over time.”
- KC's View:
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First of all, is it really any surprise that Lampert would try to get out of a financial obligation that he had to former Sears employees? I’m not saying that Sears Holdings held up its side of the bargain, but Lampert trying to welch on a deal seemed pretty much like a foregone conclusion.
Here’s the sad bottom line. Over the past 15 years, Sears has closed some 3,500 stores and eliminated some 250,000 jobs. A formerly iconic retailer now has about 400 stores, and is owned by someone who has steadfastly mismanaged it through ignorance and incompetence, but who, I’m fairly certain, will come out of it with a profit, because that’s always what happens with guys like this.
Sears is actually opening new stores these days - smaller format units called Sears Home & Life that sell mattresses, appliances and smart-home items. Hard for me to imagine that this will work … since there are better, more progressive and disruptive companies out there (Amazon? Caspar? Even Best Buy?) that these days may have more brand equity and a greater upside.
Typically, I’m guessing that Sears is a day late and a dollar short.
