(Reuters) – The board directors of Two Sears Holdings Corp SHLDQ.PK have appointed investment bank Evercore Inc (EVR.N) to review transactions conducted by Exar Sears Chief Executive Eddie Lampert with the US retailer before filing for bankruptcy, people familiar with the matter said on Friday.
A derelict Sears store is seen in Santa Monica, California, United States, on October 15, 2018. REUTERS / Lucy Nicholson / File Photo
The transactions, including the separation of Sears' businesses and real estate, may be examined in bankruptcy proceedings, with creditors claiming that the transactions have deprived the merchant of valuable assets. Billionaire Lampert is the largest shareholder and creditor of Sears through its hedge fund ESL Investments Inc.
"ESL supported the board's decision to approve the review," said a spokesman for Lampert's hedge fund. "These types of analyzes are common and ESL is confident that the Subcommittee will confirm that the transactions with ESL have been conducted on fair and reasonable terms and have been approved under appropriate corporate governance procedures."
Sears, who filed for bankruptcy on October 15, and Evercore declined to comment.
Sears directors Alan Carr and Bill Transier, who joined the retailer's board in early October, would work with Evercore to review the business and decide if there could be legal action against Lampert who was asked not to be identified the role of Evercore is not yet official.
In addition to the directors, Lampert is also likely to face the Sears & # 39; unsecured creditor panel, a group that was, in most cases, selected by a bankruptcy administrator for the government, it said. The committee includes Sears landlord, the US government oversees its remaining retirees, sellers and bondholders.
In addition to the directors, Lampert is also likely to face the Sears & # 39; unsecured creditor panel, a group that was, in most cases, selected by a bankruptcy administrator for the government, it said. The committee includes Sears Landlords, the US government agency that oversees its remaining retirees, sellers and bondholders.
Lampert arranged in 2005 the merger of Sears with the discount chain Kmart. Since then, he has completed numerous transactions with the retailer, including the allocation of approximately $ 2.7 billion of his property to Seritage Growth Properties (SRG.N).
In recent years, ESL has given Sears rescue loans as it has lost billions of dollars and has fallen behind in competition with discounter Walmart Inc (WMT.N) and e-commerce company Amazon.com Inc (AMZN.O). Lampert now owes about $ 2.6 billion from Sears and owns nearly half of the company.
The hiring of Evercore is still subject to court approval. The committee has also hired law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP to review bids after court filings.
Sears is also trying to bankrupt the funding to avert the liquidation. The trader postponed a hearing on a loan that Lampert had negotiated and filed a new date, according to court documents.
Long history of business with SEARS
Andrew Diderderich, a lawyer representing Sears' creditor Fairholme Capital Management LLC, said the company's many businesses over the years led to a slow-motion.
"These cases are the last mile in a multi-year liquidation that happened without judicial oversight," Diderderich said last week in the US bankruptcy court in White Plains, New York. Bruce Berkowitz, Fairholm's founder, resigned from Sears & # 39; Board in 2017.
Creditors may argue that transactions that have taken place before bankruptcy withhold valuable and anticipated legal proceedings designed to determine their repayment.
"All the transactions that took place here, your honor, took place with the strictest supervision of corporate governance," said ESL lawyer James Bromley at the hearing before the bankruptcy court, adding that Fairholme representatives were represented on the Sears board several transactions.
Lampert now proposes to buy financially healthier Sears deals in a bankruptcy auction after bidding earlier this year to buy the company's real estate, Kenmore device brand, and the home-service business outside the court.
Reporting by Jessica DiNapoli and Mike Spector in New York; Editing by Clive McKeef