After four years stuck in bankruptcy limbo, Sears Holdings and its creditors have reached a settlement with former Chief Executive and majority shareholder Eddie Lampert and other investors, clearing the path for the once-storied retailer to execute its bankruptcy plan, MarketWatch reported. Under the terms of the deal, which was filed in the U.S. Bankruptcy Court for the Southern District of New York, the plaintiffs will receive $175 million to end years-long litigation that pitted creditors against Lampert and other defendants. In a filing from November of 2019, Lampert and others were accused of “asset-stripping and ‘rank’ self-dealing” in the years leading up to the collapse of Sears and its bankruptcy filing. Lampert had positioned himself to benefit from the many moves required to keep Sears in business, while shielding himself from potential downside. Lampert wore many hats at Sears, from CEO, shareholder, lender to the company via his hedge fund ESL Investments Inc., and even landlord for some of Sears locations. Lampert and ESL received interest payments on loans and rents on real estate, even as the company continued to post heavy losses. Lampert and ESL also invested in, or took controlling stakes in, assets divested as the company struggled with declining sales, which included property, product brands, and retail brands such as Sears Canada and Lands’ End. After the bankruptcy filing, the remaining Sears and Kmart outlets were sold to Transformco, an entity controlled by Lampert, in 2019. Most of those stores have subsequently closed.
