Investors reach $40 mln settlement over Sears real estate deal

1 Attorneys

#1 Attorneys Network

1 Legal - 1 Lawyers - 1 Attorneys

Injury Lawyer - Criminal - Foreclosure - Divorce


By Tom Hals | WILMINGTON, Del.

WILMINGTON, Del.Sears Holding Corp’s
chairman and chief executive, Eddie Lampert, and the company’s
board agreed to a $40 million settlement of a shareholder
lawsuit that alleged Lampert benefited from a deal to spin off
235 of the struggling chain’s best stores.

The lawsuit was brought on behalf of Sears and against
Lampert, other Sears directors and Seritage Growth Properties
, the real estate investment trust established to acquire
the stores.

Sears spokesman Chris Brathwaite said the lawsuit was
settled to avoid protracted litigation. The settlement must be
approved by Delaware’s Court of Chancery. The defendants said in
court papers the agreement was not admission that the
allegations were valid.

The lawsuit is a derivative action and the settlement
payment will be made to Sears. The company’s shareholders will
only benefit indirectly.

The lawsuit by individual investors stems from a deal in
which Sears spun off Seritage in 2015 to its shareholders by way
of a rights offering. Seritage then paid $2.6 billion for Sears
and Kmart stores, most of which were leased back to Sears

The deal provided much-needed financial flexibility for
Sears, which has been struggling for years.

Lampert controlled Sears and owns about 9.6 percent of
Seritage, although investors alleged he controlled the real
estate company.

The lawsuit alleged the deal was structured to put the best
real estate into Lampert’s hands to the detriment of Sears.

The rest of the Sears’ board, which includes Steven Mnuchin,
who is currently the nominee to be U.S. Treasury secretary, were
alleged to have failed to properly oversee the deal and protect
the interests of Sears.

The settlement payment was being funded “by defendants
and/or their insurers,” according to papers filed with
Delaware’s Court of Chancery.

Derivative lawsuit settlements often lead to changes in
corporate governance but rarely produce cash payments. News Corp
received $139 million after investors sued its board for failing
to investigate a phone hacking scandal at the company’s British
newspapers. That settlement was paid by insurance coverage.

Fairholme Capital Management LLC and Lampert’s ESL
Investments Inc, which have significant stakes in Sears and
Seritage, were also named as defendants.

1 Attorneys
1 Attorneys

1 Legal

#1 Attorneys Search Engine

1 Legal is part of the 1 Search Project

Practice Areas - News - Federal - State - Contact Us



1 Attorneys

#1 Attorneys Network

1 Legal - 1 Lawyers - 1 Attorneys

Injury Lawyer - Criminal - Foreclosure - Divorce


Leave a Reply