Last month, Mr. Lampert and the Sears board agreed to pay $40 million to settle a shareholder lawsuit claiming<br />that Sears’s sale and lease-back of much of its most valuable real estate to a real estate investment trust — 43 percent owned by Mr. Lampert and his ESL hedge fund — was a blatant conflict of interest that harmed Sears shareholders.<br />Last week, Sears Holdings, the parent company, said what was becoming increasingly obvious to most investors, not to mention anyone<br />who’s been in a Sears store lately: “Substantial doubt exists related to the company’s ability to continue as a going concern.”<br />Sears said that the statement reflected a new, more stringent accounting rule, and that the company was in no imminent danger of bankruptcy.<br />Over the last two years alone, Mr. Lampert and ESL have extended Sears over $800 million in loans secured<br />by Sears assets — nearly two-thirds as much as Sears’s entire market capitalization of $1.2 billion.<br />Sears has denied any wrongdoing and said it had settled the suit merely to avoid “protracted litigation.”<br />Mr. Lampert “has stripped Sears of its assets,” Mr. Cohen said.<br />Although Mr. Lampert probably shows substantial gains on his original investment in Sears<br />and Kmart, “he and ESL investors can’t have fared very well over the past six or seven years,” Mr. Melich said.
