By  on July 24, 2009

A judge in U.S. District Court in Manhattan has dismissed a securities lawsuit that accused Sears Holdings Corp. chairman Edward Lampert and Julian Day, the former chief executive officer of Kmart, of undervaluing Kmart’s real estate assets when it emerged from bankruptcy.

The complaint, filed by investors in 2006, alleged Day and Lampert misled shareholders about the value of the firm’s real estate holdings in Securities and Exchange Commission filings. Kmart merged with Sears Roebuck & Co. in 2005 to become Sears Holdings Corp., of which Lampert is chairman and, through his ESL Investments hedge fund, majority shareholder.

The suit accused the two executives of attempting to hide the fact that Lampert’s hedge fund had gained a controlling stake in the company in bankruptcy at a price below market value.

In dismissing the case this week, Judge Lewis Kaplan wrote, among other reasons, the plaintiffs’ valuations of Kmart’s real estate were “too speculative.”

ESL holds 54.1 percent of Sears’ common stock, according to Sears’ definitive proxy statement, filed with the Securities and Exchange Commission in March.

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