Sears buyer says he shouldn’t have to cover worker severance

When Eddie Lampert sweetened his offer to buy Sears out of bankruptcy, the increased ante included a provision setting aside up to $43 million for severance for laid-off workers. Lampert is now asking a judge to relieve him of the obligation, arguing he didn’t get what he paid for in buying the struggling department-store chain for $5.2 billion earlier this year.

Lampert’s concession to former employees followed a campaign by labor advocates to shame the billionaire into providing financial assistance to Sears and Kmart workers laid off without severance. A similar effort yielded some financial help for tens of thousands of laid-off Toys R Us workers.

“Sears always promised us one week of severance pay for every year we were with the company. But after 21 years of service, I was laid off in January of 2019 and received just four weeks of severance pay,” Brenda Urrutia, of El Centro, California, said in a statement issued Tuesday by the union-backed United for Respect. “It’s not fair that Eddie Lampert and his friends are walking away with billions and now trying to cheat dedicated employees like me from what we were promised.”

Lampert, however, claims that a group of creditors tied to Sears Holdings haven’t handed over “hundreds of millions of dollars of assets,” leaving his Transform Holdco short and voiding financial obligations including the payouts to former employees. Transform Holdco has paid at least $128 million it was not obligated to cover, and is now owed $20 million, along with the Sears corporate headquarters in Illinois, a suit filed by Lampert contends.

“Transform believes that prompt resolution of these matters is important and necessary at this time to allow the bankruptcy court and creditors to consider the Defendants’ proposed Chapter 11 plan,” a spokesman emailed, citing its May 25 complaint against Sears Holdings, filed with the U.S. Bankruptcy Court for the Southern District of New York.

Sears Holdings, a group of creditors who opposed Lampert’s bid for Sears, is asking the bankruptcy court judge to make Lampert pay more than $200 million as part of his court-sanctioned deal for the retailer’s assets. Lampert and Transform, they contend in their own legal claim, are trying to “litigate after-the-fact a better deal for itself than the deal for which it bargained.”

Attorneys for Sears Holdings did not immediately return requests for comment.

In March, an undisclosed number of 90,000 Sears retirees learned the retailer had ended their life insurance benefits.

Sears offered itself for sale through the bankruptcy court after years with Lampert at its helm as the chief executive and largest shareholder.