Creditors Say Eddie Lampert Killed Sears in a 'Shakespearean Tragedy'
(Bloomberg) -- Sears chairman Eddie Lampert and his hedge fund ESL caused the death of the once-mighty retailer that was “nothing short of tragic,” a committee of its creditors said, likening it to works penned by the Bard.
“The tortured story of Sears reads like a Shakespearean tragedy, playing out over five acts,” the unsecured lenders said in a proposed complaint filed Wednesday. The creditors’ committee argued in their complaint that ESL’s winning bid to salvage Sears is fundamentally flawed, would wrongly enrich ESL and should not be approved by the judge overseeing the retailer’s bankruptcy.
The committee wasted no time getting dramatic. It divided the filing’s table of contents into Acts I to V, plus an epilogue, with headings such as, “ESL Sets the Stage for Sears’s Demise with the Take Over and Stock Buybacks,” for Act One, and for Act Five: “The Long-Awaited Bankruptcy.”
Lampert never had a realistic plan to revive the company, the creditors said, calling his financial projections “delusional at best and fraudulent at worst.”
A representative for ESL said in a statement that the fund has been a constant source of financing for Sears, which was undertaken to help the company’s continued operations and implement its transformation plan.
“We reject any assertion to the contrary and will vigorously contest any effort to assert claims against ESL, its principals or affiliates concerning these transactions," the representative said in the statement.
A representative for Sears declined to comment.
Each year, Lampert and ESL created financial projections that made it look like the troubled retailer was headed for a dramatic turnaround, which caused the company to miss revenue targets every year from 2010 to 2017 by an average of over $4 billion per year, according to the complaint. The creditors argued that Lampert stripped out assets and then lent to Sears knowing it was unlikely to ever recover and repay him, with the goal of positioning himself to take over Sears in an inevitable bankruptcy.
A hearing date on the proposed complaint, filed with a motion seeking to prosecute claims against Lampert and ESL, has yet to be determined, according to the document. The committee of unsecured creditors last week asked for permission to file the proposed complaint and for authority to prosecute its claims.
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