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Sears sues Lampert, claiming he looted company and drove it into bankruptcy

Reuters

NEW YORK, April 18 () - Sears Holdings Corp sued longtime Chairman Eddie Lampert, his hedge fund ESL Investments, and former directors including Treasury Secretary Steven Mnuchin, accusing them of allowing the retailer to be looted of billions of dollars before its October 2018 bankruptcy.

The lawsuit, made public on Thursday, was filed by the restructuring team winding down what remains of the pre-bankruptcy Sears following Lampert's $5.2 billion purchase in February of most of its assets.

Sears accused Lampert of ordering the creation of bogus financial plans showing the retailer would turn itself around even as it racked up huge losses, enabling the transfer of five major assets including Land's End and Sears Hometown Outlet for his benefit.

Other defendants include Bruce Berkowitz and his Fairholme Capital Management, which had been a large Sears shareholder, and Seritage Growth Properties , which housed 266 of Sears' more profitable stores after being spun off.

Mnuchin, a college roommate of Lampert's at Yale University, had been a Sears director and ESL executive.

Representatives for Lampert and ESL, Berkowitz and Fairholme, Seritage and the Treasury Department did not immediately respond to requests for comment. The post-bankruptcy Sears did not immediately respond to a similar request.

The reorganized company was expected to have about 425 Sears and Kmart stores, down from roughly 3,500 when those companies merged in 2005.

The case is Sears Holdings Corp et al v Lampert et al, U.S. Bankruptcy Court, Southern District of New York, No. 19-ap-08250. The main bankruptcy case is In re Sears Holdings Corp in the same court, No. 18-bk-23538.


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