trending Market Intelligence /marketintelligence/en/news-insights/trending/-_8g-rhMjN8p5b1F1R-laA2 content esgSubNav
In This List

Lampert sues Sears estate over breach of sales agreement


Insight Weekly: Sustainable bonds face hurdles; bad loans among landlords; AI investments up


Master of Risk | Episode 3: Live from the Global Credit & Risk Symposium


Insight Weekly: Bank oversight steps up; auto insurers’ dismal year; VC investment slumps


Insight Weekly: Renewables lead capacity additions; bank mergers of equals up; nickel IPOs surge

Lampert sues Sears estate over breach of sales agreement

Former Sears Holdings Corp. Chairman and CEO Eddie Lampert, through Transform Holdco LLC, an affiliate of his hedge fund ESL Investments Inc., is suing the Sears estate of breaches of contract and other offenses in connection to their asset purchase agreement that pulled Sears out of bankruptcy.

In a May 25 adversary complaint filed with the U.S. Bankruptcy Court for the Southern District of New York, Transform said the Sears estate failed to deliver "hundreds of millions of dollars of assets" in connection to the asset sale.

Lampert acquired Sears and its remaining assets for approximately $5.2 billion to save the retailer from bankruptcy, despite opposition from Sears' unsecured creditors. ESL was Sears' largest shareholder and creditor prior to the transaction.

Two months after the deal was closed, the old Sears sued Lampert, other insider shareholders and directors, claiming they defrauded creditors by transferring the company's assets until the company had insufficient capital. At the time, ESL refuted the claims, saying it was focused on reducing Sears' debt.

Most recently, Transform said ESL has shown its commitment to the retailer, being the only bidder to submit a viable going-concern bid for all of Sears' assets.

"In doing so, ESL has expended tremendous resources in order to resurrect an American icon and keep in place tens of thousands of jobs that would have been lost had the defendants pursued liquidation," Transform said in the court filing.

Lampert's party is demanding a trial and no less than $130 million in compensatory damages, saying Sears' actions have "imposed undue liabilities on Transform and deprived it of bargained-for assets, funds, and other value."

Transform said Sears' "breaches and other misconduct" have harmed it by depriving it of assets that it contracted to purchase under the asset purchase agreement. Among these assets was Sears' headquarters in Hoffman Estates, Ill., which was intended to be transferred to Transform as part of the asset sale. Transform said only three of the 16 parcels of land that make up Hoffman Estates were delivered.

Sears also required Transform to take on unbargained-for liabilities, including $166 million in payables and payment obligations, according to the complaint. Transform said it has been compelled to satisfy more than $128 million of payables outstanding that Sears should have assumed.

Sears did not immediately respond to S&P Global Market Intelligence's request for comment.