The Wall Street Journal has reported that a group of retirees from Sears Canada filed court documents on Friday seeking the appointment of a trustee in the retailer’s bankruptcy dealings. The goal is to claw back dividends paid to shareholders, a large portion of which went to businesses related to Lampert.
The plaintiffs are arguing that these special payments, made over a decade, undermined the retailer’s operations.
Lampert, who is the CEO of Sears Holdings in the U.S., held a 45 percent stake in Sears Canada through ESL after it was spun off in 2013.
The retailer filed for bankruptcy protection in June and opted for liquidation in October. The group estimates they’re owed $270 million from their pension and $400 million in health and life insurance benefits. The concern is that once secured lenders are paid off in the bankruptcy proceedings, there may be nothing left for them.
In a blog post published on Sunday, Lampert sought to clear up the “distorted narrative” in the press regarding Sears Canada’s decline and the dividend payments at issue.
He said ultimately Sears Canada failed due to an unsuccessful “aggressive” operating strategy, which Lampert said he expressed concerns about at the time.
Further, Lampert said the roughly $500 million in dividends that the company paid shareholders following real estate sales in 2012 and 2013 did not drain the coffers. Even after the dividends, he said Sears Canada had an equal sum left to fund operations. He illustrates his point by noting the retailer was able to continue to invest in the business and make required pension plan contributions though 2016.
Finally, Lampert said the pension plan should be able to meet its obligations, saying reports to the contrary are due to confusing two different obligations and misestimating interest rates affecting the plan.
“I too very much regret the failure of Sears Canada. Like all other stakeholders, ESL has suffered significant losses from the bankruptcy of this storied company – shareholders collectively lost over C$1 billion since 2012, even taking into account the dividends received,” he wrote.