Former Sears holding company sues ex-CEO, Mnuchin and others over 'asset stripping'

Former Sears holding company sues ex-CEO, Mnuchin and others over 'asset stripping'
© Greg Nash

The holding company that formerly owned Kmart and Sears sued Treasury Secretary Steven MnuchinSteven Terner MnuchinWhite House, Democrats edge closer to deal on trade Pelosi gets standing ovation at Kennedy Center Honors World Bank approves billion-plus annual China lending plan despite US objections MORE and other former board members of ESL Investments as well as the company's ex-CEO, Eddie Lampert, accusing them of illegally stripping Sears of assets ahead of the company's bankruptcy filing.

USA Today reported Thursday that Sears Holdings filed a lawsuit targeting roughly two dozen figures including Lampert, Mnuchin, and others involved with ESL Investments, who the lawsuit alleges were involved in a scheme to "hinder, delay and defraud creditors and/or occurred when the Company was insolvent and had insufficient capital to continue its operations and to repay its billions of dollars in debt."

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"Sears would have had billions of dollars more to pay its third-party creditors today and would not have endured the amount of disruption, expense and job losses resulting from its recent bankruptcy filing," had Lampert not taken actions instead to enrich himself and ESL Investments, the lawsuit alleges.

ESL Investments said in a statement to USA Today that it "vigorously disputes" the lawsuit, calling the accusations found within "baseless allegations and fanciful claims" that "are misleading or just flat wrong."

"We are confident that the processes we followed for each of these transactions are unimpeachable," a spokesman for ESL Investments told The Hill. "We reject the debtors’ allegations and will vigorously contest their complaint concerning these transactions.”

Sears filed for Chapter 11 bankruptcy protections in October after shutting down thousands of stores and cutting hundreds of thousands of employees across the country.

A spokesman for the Treasury Department did not immediately return a request for comment on the lawsuit Thursday evening.

This article was updated Friday April 19 at 6:50 p.m.