Two Sears board directors have hired an investment bank to look into deals made by the company's former CEO Eddie Lampert before the company filed for bankruptcy.
The directors are questioning the ways the company separated its real-estate and Sears' businesses under Lampert's watch.
The directors say that doing so caused Sears to lose several valuable assets. They are consulting with the investment bank on whether Lampert's actions constituted legal actions against him.
Lampert is currently owed $2.6 billion by Sears due to his hedge fund, ESL Investments, infusing the company with billions of dollars when its profits were being affected by retail giants Walmart and Amazon.
Lampert is now looking to buy Sears in a bankruptcy auction under the terms that it will be in a stabler financial condition.
(Reuters) - Two Sears board directors have hired investment bank Evercore to scrutinize deals that were led by former Sears Chief Executive Eddie Lampert with the US retailer before it filed for bankruptcy protection, people familiar with the matter said on Friday.
In addition to the directors, Lampert will also likely face probing from Sears' unsecured creditors' committee, a group selected by a government bankruptcy watchdog in most cases, the sources said. The committee includes Sears' landlords, the US government overseeing its remaining pensioners, vendors and representatives for bondholders.
In addition to the directors, Lampert will also likely face probing from Sears' unsecured creditors' committee, a group selected by a government bankruptcy watchdog in most cases, the sources said. The committee includes Sears' landlords, the US government body overseeing its remaining pensioners, vendors and representatives for bondholders.
Lampert arranged Sears' merger with discount chain Kmart in 2005. Since then, he has led numerous deals involving the retailer, including separating roughly $2.7 billion of its real estate into Seritage Growth Properties.
In recent years, ESL has extended rescue loans to Sears as it lost billions of dollars and fell behind in the competition with discount retailer Walmart and e-commerce company Amazon.com. Lampert is now owed about $2.6 billion by Sears and owns close to half the company.
Evercore's hiring remains subject to court approval. The committee has also hired law firm Paul, Weiss, Rifkind, Wharton & Garrison to help review the deals, according to court filings.
Andrew Dietderich, an attorney representing Sears creditor Fairholme Capital Management, said the company's many deals over the years resulted in a slow-motion bankruptcy.
"These cases are the last mile in a multi-year liquidation, one that happened without court supervision," Dietderich said in US Bankruptcy Court in White Plains, New York last week. Bruce Berkowitz, Fairholme's founder, stepped down from Sears' board in 2017.