The bankrupt estate of Sears Holding Corp. won court approval to settle complex litigation against former CEO Eddie Lampert and other investors for $175 million, helping bring the retail chain’s four-year-old Chapter 11 case to a close, Bloomberg Law reported. Resolution of the litigation, which focused on $2 billion worth of pre-bankruptcy transactions engineered by Lampert and his hedge fund ESL Investments Inc., dispels lingering uncertainty about the estate’s ability to pay creditors pursuant to a chapter 11 plan approved nearly three years ago. Judge Robert Drain of the US Bankruptcy Court for the Southern District of New York said he would approve the deal during a virtual court hearing yesterday, marking what should be the retiring jurist‘s final appearance in the case. The settlement, which was negotiated over the course of several months with the help of three mediators, allows the estate to avoid what would likely be two more years of litigating “complex, and therefore expensive” legal claims, Drain said. Although the amount of claims asserted “were substantially higher than the settlement amount,” those figures are discounted “by probability of success,” he said. He noted that the deal allows the company to pay all administrative and priority claims required under the plan.
