Ex-Sears CEO Refuses to Make $43M In Severance Payments Promised To Workers

Phillip Pessar / Flickr / CC BY 2.0

Former Sears Holdings chairman and CEO Eddie Lampert believes he is not obligated to pay laid off workers or creditors.

Eddie Lampert, former Sears Holdings chairman and CEO, is refusing to make the $43 million pension payments he owes to the thousands of former workers that lost their jobs in Sears’ multiple store closings, reports CNN.

Lampert also claims that he is not responsible for making payments to creditors, which Sears Holdings says he is.

Sears Holdings is what remains of the old bankrupt Sears, and its sole purpose is to settle claims against its assets.

Previously, Lampert had agreed to pay the severance packages. His attorneys told a bankruptcy court that Lampert and his hedge fund ESL were best suited to assist the newly unemployed workers.

However, in the most recent court documents, ESL states that it will not make the severance payments because Sears has not given ESL all of the promised assets in the contract drawn up for ESL’s purchase of Sears. These assets included an amount of store inventory, and the company’s Chicago headquarters.

As ESL’s lawyers argued, “Because of these shortfalls, [ESL] believes it has no obligation to assume $43 million in severance.”

Last Tuesday, Sears Holdings filed a motion with the court, arguing that ESL is not owed any more assets under the terms of sale.

Sean O’Neal, an ESL attorney, said: "We do have a number of disputes about the plan, but we will put those to the side right now.”

Read the full story here.