The estate of Sears Holding Corp. is trying to take back payments it made to vendors — many of them small businesses — more than a year ago as it tries to shore up funds to wrap up its bankruptcy case, Bloomberg News reported. The company is seeking bankruptcy court approval of streamlined procedures for about 730 preferential transfer lawsuits it recently filed. The lawsuits, known as adversarial proceedings, were filed against creditors that received payments for services or products in the 90-day period immediately before the bankruptcy filing, called the preference period. While the motion is standard procedure in a bankruptcy, the size and scope is unusual, said <b>David Wander<b> a partner at Davidoff Hutcher & Citron LLP. “In Sears there are many more of them,” said Wander, who represents a number of Sears vendors and creditors. In addition to the recent filings, the estate filed about 400 in November and is expected to file additional lawsuits that in total will impact as much as 2,000 vendors, according to court papers. The Sears estate will use the funds to pay administrative expenses related to the bankruptcy. For the small businesses affected, it is a bit of a lose-lose situation, Wander said. While the vast majority will settle, many for a repayment far less than the bankrupt retailer originally asked for, the legal fees alone may be financially debilitating, he added. This is not the first time Sears estate has had issues with its vendors. In December, some companies that were owed money by the retailer, expressed concern that they would not receive payments. Read more.
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