Sears Borrows $400 Million From Its CEO, No Conflict Of Interest Here

(Great Beyond)

(Great Beyond)

Sears Holdings Company keeps losing money, and they need to borrow some cash. What do you do when you have trouble getting a loan and really can’t afford to pay a lot of interest on the money you desperately need? You ask your parents. In the case of Sears, its dad is Eddie Lampert, the company’s manifesto-writing chairman, CEO, and biggest investor.

This information comes from a form 8-K, which companies file with the Securities and Exchange Commission when they have news to share that may be of interest to investors or potential investors. In this filing, Sears shared the news that it is borrowing $400 million from “entities affiliated with ESL Investments, Inc.” for “general corporate purposes.” ESL Investments is a hedge fund that’s entirely owned by a prosperous fellow named Edward S. Lampert. That name sounds familiar.

What has the company put up as collateral that the lender can foreclose on if Sears Holdings doesn’t pay the loan back? “Properties,” by which they probably mean real estate, though the information that the company has made public doesn’t specify which properties. Sears Holdings has a vast portfolio of closed stores sitting around, after all.

The loan can be extended until February 2015 at the very longest. Sears, as you may recall, has lost $1 billion so far this year.

UPDATE: Sears contacted Consumerist to point out that this loan is not a conflict of interest, according to the company board’s own Code of Conduct.

The loan is not a conflict of interest. Sears Holdings has a Code of Conduct for its directors and officers, which provides that any direct or indirect monetary arrangement for goods or services between a director and the company must be approved by the Board of Directors. This loan was approved by the Sears Holdings board. The Board believes that this loan is in the best interest of the Company.

Sears Borrows $400 Million From Lampert’s ESL Investments [Bloomberg]

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