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Sears seeks $57.5M in estate payments from ESL unit

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Sears seeks $57.5M in estate payments from ESL unit

Sears Holdings Corp. is requesting a bankruptcy judge to direct ESL Investments Inc.'s unit Transform Holdco LLC to pay $57.5 million it owes Sears in estate payments, court documents filed March 11 show.

ESL Investments through Transform Holdco acquired all of the go-forward retail footprint and other assets and component businesses of Sears in a $5.2 billion deal in February.

In the filing, Sears Holdings said Transform Holdco still owes it money from the sale of Sears' assets at a bankruptcy auction.

Sears said that the estate payments in question include credit card and cash proceeds from transactions that occurred before the sale closed, as well as cash in transit. The amount also includes a rent proration payment for February.

Earlier in March, Transform Holdco said that it has yet to receive $78 million of the $147 million in prepaid inventory it was promised, according to a March 6 court filing. Holdco also requested mediation to help the parties settle the matter.

In the March 11 filing, Sears said Holdco's mediation request is nothing more than a "transparent attempt to delay the transfer of Estate assets to gain leverage," and that ESL is avoiding the liabilities it should have assumed in the acquisition.

In addition, the retailer said the estate payment is "critical" to Sears' ability to file for Chapter 11 bankruptcy on time.

Sears is also seeking to get the mediation motion denied. The company said that when the estate payment is paid, it is willing to sit down with Transform Holdco to resolve the remaining disputes.

Sears and Transform Holdco will bring the matter before bankruptcy Judge Robert Drain on March 21.

ESL is owned by former Sears Chairman Edward Lampert, who stepped down after his hedge fund acquired Sears.