Dive Brief:
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Sears Holding Corp.’s plan to leverage its significant real estate holdings to generate much-needed cash has been challenged in courts by shareholders.
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A shareholder class action says the plan to sell more than 250 Sears stores to a Real Estate Investment Trust, then have those stores lease the properties from the REIT, would benefit Sears CEO Eddie Lampert personally, at the expense of shareholders.
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The $2.5 billion sale is scheduled to close this month, and Sears said it is fighting the legal challenge to it.
Dive Insight:
This is hardly the first time that Lampert has been accused of looking after his own interests. And Sears is hardly the first retailer to consider leveraging its properties into a REIT.
There are obvious problems with the move. First, it may not generate enough cash for Sears; second, it can be accomplished only once. Still, the move has been hailed as an effective way for the retailer to buy more time to climb out of its hole.
