Sears sues Eddie Lampert

It might seem like Sears was another casualty of the decline of brick-and-mortar, but there appears to be more to it than that, and the company is pointing fingers at their former CEO Eddie Lampert. Sears Holdings Corp. has launched a series of lawsuits against Lampert and a series of former high-profile board numbers, including U.S. Secretary of Treasury Steve Mnuchin. The lawsuit alleges that the former board members stole hundreds of billions of dollars from the company. The news was reported by CNBC.

Last October, Sears filed for bankruptcy after years of losses under Lampert's tenure as chairman, CEO, and then the company's largest shareholder. This resulted in a series of store closures, and the company was on the brink of liquidation, but Lampert saved it by buying it through his hedge fund, ESL investments. Despite Lampert saving the company, he is seen as no hero by others behind the scenes at Sears, and is actually considered the cause of Sears demise.

CNBC reported that former executives at the company says he and other shareholders benefitted from backdoor deals, like the spinning off of the Lands' End brand, as well as Sears' best properties being put into Seritage Growth Properties, a real estate trust owned by Lampert. The most suspicious thing about these deals is that when Lampert bought the company he specifically requested protection from any litigation involving the company, a request that was denied.

In the lawsuit, the company says he rejected a 1.6 billion dollar offer of investment for Lands' End from both Leonard Green & Partners and the Tommy Hilfiger investment group so he could retain his majority stake in the brand. The lawsuit also says that Seritage's deal with Sears' where the former would acquire 266 of Sears' top performing stores was never negotiated and valued the properties at a total of 649 million dollars under their actual value. Allegations that Sears employees repeatedly produced financial plans reflecting bad-faith predictions that the company would experience a dramatic turn-around from deep and mounting losses to sudden profitability were also made in the lawsuit.

If Lampert thought he was out of the woods when he bought Sears, he can think again. These claims are sure to be thoroughly disputed, but this won't be a verdict overnight situation.

A spokesperson for ESL Investments told FOX Business that the debtors’ “allegations are misleading or just flat wrong.”

“All transactions were done in good faith, on fair terms, beneficial to all Sears stakeholders and approved by the Sears Board of Directors, made up of a majority of independent directors, as well as the company’s Related Party Transactions Committee, which was itself comprised of independent directors and advised by separate independent financial and legal advisors, “ ESL said.

Despite their new series of lawsuits, Sears said earlier this month they plan to open three pint-sized test stores in May to win customers back and return the company to profitability.

photo: Sears Facebook page