January 31, 2019

Senator Warren Asks for Long-Term Plan to Protect Workers as Sears Accepts Controversial Bankruptcy Plan

Years of Questionable Financial Transactions by Billionaire Chairman Eddie Lampert Preceded Bankruptcy

Text of Letter (PDF)

Washington, DC - United States Senator Elizabeth Warren (D-Mass.) yesterday sent a letter to Eddie Lampert, Chairman of Sears Holdings, asking him to prioritize the long-term health of the company and its workers. The letter follows Sears' acceptance of Lampert's bid to buy the company out of a bankruptcy that occurred under his leadership, and was sent five days prior to the bankruptcy court hearing concerning approval of the sale.

"If your offer is accepted and approved, Sears will remain open and tens of thousands of American workers will keep their jobs in the short term," wrote Senator Warren. "But I am concerned that under your leadership, Sears may continue to struggle and employees will continue to face uncertainty and anxiety over their future employment, and ongoing risks to their benefits and economic security."

Senator Warren's letter raises concerns about Lampert's commitment to Sears employees, given his history of slashing jobs at the company. Under his management, thousands of stores have closed, and more than 200,000 workers have lost their jobs. Lampert is also being sued for mismanagement of employee retirement funds, resulting in a $1.4 billion shortfall in the company's pension fund, a deficit that the Pension Benefit Guaranty Corporation, the government agency responsible for insuring pension plans, will likely be forced to cover.

On January 23, 2019, the Unsecured Creditors Committee (UCC) of Sears, a group comprised of nine of Sears' major creditors, filed a 570-page motion alleging fraudulent activities by Lampert and his firm over the course of his tenure as Chairman and CEO of Sears. These include allegations of falsified financial projections, insider trading, unnecessary spin-offs, and excessive buybacks for ownership gains that demonstrate an established pattern of stripping value from Sears for personal profit.

"These inherent conflicts of interest and the decisions you made while running the company have short-changed Sears' workers, leaving a company with a long, proud history in American retail on its last legs," wrote Senator Warren. "As Sears emerges from bankruptcy, these conflicts must be eliminated, and Sears' workers and the American public must be certain that you are doing everything you can to keep the retail chain healthy over the long-term."

A bankruptcy judge is set to make a final decision on Lampert's offer on February 4, 2019. Senator Warren's letter poses a series of questions to Lampert about his commitment to the long-term success of Sears and the protection of its workers and requests answers by February 14, 2019.