Edward Lampert speaks during a press conference to announce the merger between Kmart and Sears in New York on November 17, 2004.
Gregory Bull | AP
Presidential candidate Sen. Elizabeth Warren and Rep. Alexandria Ocasio-Cortez sent a letter to Sears & # 39; former President & CEO Eddie Lampert who paralyzed him to avoid paying $ 43 million in dismissal to department store employees.
Lampert bought Sears in bankruptcy last year through an affiliated hedge fund ESL Investments, Transform Holdco, after several years of fallout under his leadership as CEO and chairman. The agreement, which rescued the company from liquidation, also promised that Lampert would cover severance costs for employees who lost a bankruptcy job.
Sears and Lampert have since spared what each party thinks they owe each other as part of the deal. Lampert said in court that Sears fell under what he owed him. To alleviate the loss, he requests approval from the bankruptcy judge not to pay $ 43 million in dismissal.
In a letter sent Thursday, Warren, D-Mass and Ocasio-Cortez, DN.Y. out at Lampert.
"Lack of payment of these payments will constitute a broken promise on your part and a betrayal of hard-working Sears employees ̵
The two mentioned a written exchange between Lampert and Warren earlier this year, when the Senator asked about Lampert's plan to buy Sears & # 39; bankruptcy and retailers' viability under his ownership. In Lampert's reply dated February 19, he defended his leadership of Sears and assured Warren that his deal to buy the retailer would guarantee severance pay for employees who lost their jobs after filing on October 15 and not joining the company.
"But for the sale to ESL, these employees would not get anything," Lampert wrote.
But these payments are now in doubt. In court documents filed during the last two weeks, Lampert and Sears have spared how the two share the remaining expenses and assets. To ensure that Sears could cover its administrative expenses, Lampert would, as part of its acquisition of Sears, pledge that Transform pay up to $ 270 million to cover the costs of redundancy and money owed to its suppliers.
But Lampert, through Transform, says he can no longer raise $ 270 million because Sears has been short on what it owes Transform. Transform claims that Sears had not delivered the prepaid bill it promised, inflated the amount owed to Transform by Sears, not surrendering its entire headquarters in Illinois with other complaints.
Sears disputes the allegations. It accused Transform of playing hardball with Sears as a stall negotiation tactic to get more from a company on the brink of liquidation. Sears, in court documents, acknowledged that it did not deliver $ 55 million in prepaid inventory owed to Transform.
The two parties issued their complaints this week before Judge Robert Drain of the US District Court of New York, but did not come to a decision. The two are expected to have a follow-up hearing later this summer. Drain urged the two to resolve their differences before then, and gave him assistance in arbitration.
"Mediation is not free, but before a judge is almost free, consider it," he said.
The letter from the two legislators follows up on a similar query to Steven Mnuchin who raises questions about his time at the Sears & # 39; Board before becoming Secretary of the Trump Administration Finance Minister. The letter came about a month after Sears filed a lawsuit against Lampert, Mnuchin and other former board members, claiming to steal billions from the former titan in the US retail business. Lampert disputes these claims.