Industry News

Sears, Yet Again

It seems like only yesterday when Industry News wrote about Sears CEO Eddie Lampert. In fact, it was two weeks ago—but during that brief period there have been major developments.

And yet, really, things are pretty much the same.

On Monday, October 15, Sears finally filed for Chapter 11 bankruptcy. Most would ask, “what took so long?” That question is answered by the title of this article on The American Prospect, which states the case succinctly, if brutally: “How Sears Was Gutted By Its Own CEO”. As part of the filing, Lampert stepped down as CEO—but stays at the company’s chairman.

It’s impossible to follow the trail of the deals, restructurings, sell-offs and land-grabs that have occurred during Lampert’s watch, unless you draw a diagram. You’d better have a damned big white board, too.

The primary creditor of Sears Holdings is ESL Investments, a hedge fund owned by…Edward S. Lampert. Much of the company’s real estate has been sold to Seritage , a REIT (real estate investment trust) primarily owned by—you guessed it, Lampert. And by the way: much of that real estate is being leased out at a rate 2-4 times that being paid by cheapskate Sears.

As part of the bankruptcy, over 140 more stores will be closed by the end of 2018. Chapter 11 bankruptcy is designed to allow a company time to reorganize, with the cooperation of creditors; if it appears that reorganization will not salvage the company—and in this case, how could it?—the Federal Bankruptcy Judge will likely force the case into Chapter 7, liquidation.

At this point, a once-great company is on its last legs—and Eddie Lampert lives on a private island off Miami.

Say what you will about the robber barons of the late 19th and early 20th centuries, but they built things—not dismantled them.