We continue with the interview with Mark Cohen, the former CEO of Sears Canada about how a hedge fund manager named Eddie Lampert took down two of the most iconic brands in America. In this second half of the interview, we learn about the effects of Lampert’s mismanagement and why there were few people, including the media that could stop what was going on.
This is the way he plays. This is the way lots of people were treated by Eddie Lampert, plus lots of companies. The way this guy is Donald Trump is personified in his behavior. So to get back to the present, Kmart has got what, three stores left? Sears has got maybe 20 left. The only reason there are any left is that Lampert still got some net operating losses that he can yet harvest. And a curious thing happened when this thing went into bankruptcy. The company filed bankruptcy in October, I think of 18 yep, 2018. And retailers never filed for bankruptcy in October. They file for bankruptcy in January. They filed bankruptcy in January when they harvested all of the holiday sales. They have all of that cash in hand, and they have failed to pay their bills. So they have leverage going into bankruptcy. They got a fair amount of liquidity even though they’re filing bankruptcy and they owe a lot of money, but they go into court with chips in hand. When you file in October, you don’t have the holiday receipts in hand. He had a file because there was 175,000,000. I’m not sure that’s the exact number, but it was a substantial note due that he intended to pay off using a special dividend, which is something.
He’d been doing it continuously by basically telling the board, to issue a special dividend or pay me back for one of these collateralized stores. And the board finally, the US board finally woke up and realized that if they continue to do his bidding they personally were going to be in legal…