Edward Lampert speaks at a press conference to announce the merger of Kmart and Sears in New York on November 17, 2004.
Gregory bull | AP
The presidential candidate, Sen. Elizabeth Warren and Rep. Alexandria Ocasio-Cortez, sent a letter to former Sears president and CEO Eddie Lampert, criticizing him for efforts to avoid paying $ 43 million in compensation to employees of the store.
Lampert bought Sears bankrupt last year through an affiliate of its ESL Investments hedge fund, Transform Holdco, after years of falls under his leadership as CEO and president. The agreement, which saved the company from liquidation, also promised that Lampert would cover severance costs for workers who lost a job in bankruptcy.
Since then, Sears and Lampert have discussed what each party believes is owed to them by the other as part of the deal. Lampert said in court documents that Sears did not comply with what he owes. To help offset the loss, he is requesting the bankruptcy judge's approval not to pay $ 43 million in compensation.
In a letter sent on Thursday, Warren, D-Mbad. And Ocasio-Cortez, D-N.Y., Arrested against Lampert.
"Failure to make those payments would amount to a broken promise on your part, and a betrayal of Sears' hard-working employees, some of whom have worked at the company for decades, who rely on the compensation promised." Pay the rent, take care of the children and put food on the table, "they said.
The two referred to a written exchange between Lampert and Warren earlier this year, in which the senator asked about Lampert's plan to buy the bankruptcy of Sears and the viability of the retailers under his ownership. In Lampert's response, dated February 19, he defended his Sears administration and badured Warren that his agreement to buy from the retailer would guarantee severance payments to employees who lost their jobs after the bankruptcy was declared bankrupt. October and did not join the company.
"But for the sale to ESL, these employees would not get anything," Lampert wrote.
But those payments are now in doubt. In court papers filed over the past two weeks, Lampert and Sears have discussed how the two are splitting the remaining expenses and badets. To help ensure that Sears could cover its administrative expenses, Lampert, as part of its agreement to acquire Sears, promised that Transform would pay up to $ 270 million to cover costs, such as severance payments and money owed to its suppliers.
But Lampert, through Transform, says he can no longer promise the full $ 270 million because Sears has fallen short of what he owes to Transform. Transform alleges that Sears had not delivered the prepaid inventory it promised, increased the amount Transform owes to Sears, did not turn over all of its Illinois headquarters, along with other complaints.
Sears answers the allegations. He accused Transform of playing hard with Sears as a stalled negotiating tactic to get more than one company on the verge of liquidation. Sears, in court documents, acknowledged that it did not deliver $ 55 million in prepaid inventory owed to Transform.
The two parties filed their complaints this week with Judge Robert Drain of the United States Bankruptcy Court for the Southern District of New York, but did not reach a resolution. The two are expected to have a follow-up hearing later this summer. Drain urged the two to resolve their differences before then, offering their help in the arbitration.
"Mediation is not free, but before a judge, it's almost free, so consider it," he said.
The letter from the two lawmakers follows up on an investigation similar to Steven Mnuchin, which raises questions about his time on the Sears board before becoming Treasury secretary to the Trump administration. The letter came about a month after Sears filed a lawsuit against Lampert, Mnuchin and other former board members, alleging that the former titan of the US retail industry was robbed of billions. Lampert has challenged these allegations.