Warren, AOC flay Sears’ Lampert over severance pay

Bloomberg

Back when Eddie Lampert was campaigning for approval of his plan to rescue Sears, he emphasized his promise to give severance to employees who lost their jobs after the retailer went bankrupt. If liquidators wound up with the chain, he told Sen. Elizabeth Warren in February, “these employees would be getting nothing.’’
Warren and Representative Alexandria Ocasio-Cortez (AOC) criticised Lampert for backing off his pledge, after his firm said in court papers it had no severance obligation because of a shortfall in funds it expected to get from the old Sears Holdings Corp.
“You are betraying the commitment you made to Sen. Warren, to the bankruptcy court, and most importantly, to the tens of thousands of workers who have lost their jobs and face uncertain futures after your exploitative tenure at Sears,” the lawmakers wrote to Lampert in a letter.
They asked him to respond by June 14 to a series of new questions about his plans for Sears, including the promise for severance of up to $43 million.
Those accusations are false, according to Lampert’s Transform Holdco, which said in an emailed statement that employees of old Sears have already received their severance payments from the old Sears. The dispute revolves around whether Transform will reimburse the old Sears estate for those payments, it said.
Messages to the old Sears corporation weren’t immediately returned.
“This is a dispute between Transform and Old Sears, and no severance payments to terminated employees are ‘at risk,’” Transform said.
As part of its purchase of the chain, Transform said it agreed to reimburse old Sears for making those severance payments, in return for certain assets from old Sears. But Transform said it wound up shorted by $55 million, so it’s not obligated to make the reimbursement.
Protecting severance has become a hot-button issue for elected officials, bankrupt companies and their advisers as some of the biggest chains get consumed by the US retail bust. Workers and their advocates say it’s unfair that bankers, consultants, lawyers and sometimes owners walk away with millions of dollars in fees and assets while long-time staffers are sent away empty-handed.
The issue burst into the political sphere after more than 30,000 Toys ‘R’ Us workers didn’t get the severance they expected when the biggest US toy retailer collapsed in 2017.
Warren was among officials demanding that the chain’s old private equity owners and its financiers create a $75 million fund for the workers.
After initially balking, KKR & Co and Bain Capital created a $20 million fund.
Lampert emphasized in his letter to Warren that his rescue plan would protect jobs and pensions and ensure severance pay for those left behind.
Lampert previously has said he invested billions of dollars trying to make Sears profitable.