The estate of bankrupt Sears Holdings has agreed to settle a lawsuit over the $5.2 billion sale of its Sears and Kmart chains to former chairman and CEO Edward Lampert for about $18.3 million.
Lampert and his hedge fund formed a new company, Transform Holdco, to buy most of Sears' remaining assets, including 425 stores, last year. Disputes between Sears and Transform over certain terms of the sale "arose before the ink even dried on the contract," according to a motion filed with the U.S. Bankruptcy Court in the Southern District of New York on Friday.
Sears claimed Transform failed to turn over about $57.5 million while Transform alleged Sears didn't deliver inventory it was promised as part of the sale, among other disputes, according to a court filing describing the settlement.
Transform, the current owner of the Sears and Kmart chains, agreed to pay the department store's estate about $18.3 million, including about $13 million in cash. Those funds could go to creditors who weren't fully repaid after the company's bankruptcy.
The iconic Hoffman Estates-based retailer sought bankruptcy protection in October 2018 and has continued to struggle since its sale to Transform. The company announced plans to close about a third of its remaining Sears and Kmart stores in November and told the state it planned to lay off 195 employees in its headquarters and other field offices by Jan. 25, according to the filing with the Illinois Department of Commerce and Economic Opportunity.
There were 278 Sears and Kmart stores at the start of the holiday season, but 96 are expected to close by February.
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