The official committee of unsecured creditors said in a court filing it opposed the sale to chairman Eddie Lampert and asked court permission to file under seal a complaint against ESL for years of misconduct.
According to USA Today, attorneys representing the retailer’s unsecured creditors filed a motion Thursday in U.S. Bankruptcy Court for the Southern District of New York seeking to pursue claims against Sears saying, “the creditors’ committee has uncovered facts demonstrating that Sears’s downfall . . . also was precipitated by years of misconduct by Lampert, ESL and others.”
The motion stated, “Over the course of Lampert’s and ESL’s reign, Sears closed over 3,500 stores, cut approximately 250,000 jobs, and lost untold billions in value,” the filing says. “In effect, Lampert and ESL managed Sears as if it were a private portfolio company that existed solely to provide the greatest returns on their investment, recklessly disregarding the damage to Sears, its employees, and its creditors.”
Eddie Lampert’s winning bid to salvage Sears Holdings Corp. valued the bankrupt retailer at $5.2 billion. The move, announced Thursday, preserves 45,000 jobs and is subject to court approval February 1. Provided the closing conditions are satisfied, the transaction is expected to close on or about Feb 8.
All the other bidders at the bankruptcy auction were liquidators.
In a statement following the filing by the unsecured creditors committee, ESL said its loans and other transactions involving Sears were focused on keeping the company alive while helping it to evolve.
“ESL Investments, Inc. has been a constant source of financing for Sears Holdings over the past several years, including through the extension of $2.4 billion in various secured financings to the company,” the hedge fund said. “All transactions were done in good faith, on fair terms, beneficial to all Sears stakeholders and approved by the Sears Board of Directors . . . 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.”