Thousands of Sears retirees are looking to the courts to find a solution for their cancelled benefits.
What We Know:
- In 2018, Sears Holdings Corp. filed for bankruptcy. In January 2019, the former CEO, Eddie Lampert, agreed to buy the company out of bankruptcy. Lampert and his ESL hedge fund agreed to a $5.2 million buyout with Sears which included all of Sears’ assets. A part of this agreement was that Lampert and ESL pay severance to its former workers. Retirees were entitled to a week of severance pay for every year they were employed.
- Unfortunately, Lampert is looking to get out of paying the severance. According to court documents, Lampert currently owes $43 million in severance to retirees. In April 2019, the life insurance benefits for the retirees had also been cancelled. Lampert and ESL stopped making premium payments and terminated the retiree plan.
- Lampert has halted payments and is suing Sears for a “litany of breaches of contract and other wrongs”. According to Lampert, Sears hasn’t handed over all their assets as agreed to in the buyout deal. On the opposite end, Sears is suing Lampert for stripping them of “billions of dollars of assets”.
- The U.S. Department of Labor was against Lampert ending the life insurance without court approval. A spokesperson for the estate advised that Lampert has the right to “unilaterally amend of terminate the plan at anytime”.
- A group of retired workers are seeking court approval to form a committee to protect their benefits. The retirees feel that their policies were wrongfully terminated. A part of their concern is that spouses of retired workers are being denied life insurance payments. On May 6, a retiree died but there will be no compensation because the death occurred 21 days after the benefits were terminated.
Despite Lampert’s lawsuit, his spokesperson advised that they are committed to paying the severance to eligible workers.