Eddie \”abracadabra\” Lampert is like a dog with a rag in its mouth playing tug-a-war with its master. He just won\’t let go. When he acquired Sears and Kmart in the early 2000s, he was publicly trumpeting that he was going to return them back to their rightful positions as great iconic American brands. He did just the opposite.

With not a glimmer of vision, zero knowledge about retailing, and terrible leadership, Kmart is \”now you see it, now you don\’t\” kaput. And with sleight of hand, Eddie is turning Sears\’ agonizingly slow and painful death into a series of magic tricks. But, instead of pulling a bunch of rabbits out of a hat, he\’s hoping for cash, (directed in some way to benefit him). And this is only another of the many other financial tricks he has created over his incredibly failing retail career, all engineered to squeeze cash out of the \”wheezing-into-death\” Sears.

Following his magical maneuvering to acquire Sears out of bankruptcy, and again flowering the trick with more grand statements declaring his ability to turn it around, we hear there\’s another trick up his sleeve. He\’s suing himself. Whoa – what?!!! Hey, I know he can afford the best lawyers, but what is this all about?

With all of Eddie\’s tricks, there\’s nuance and more than meets the eye. The facts are that Sear\’s stores and other assets were acquired out of bankruptcy by Transform Holdco (an entity of Eddie\’s hedge fund), and which now becomes a \”new\” Sears, essentially owned by Eddie. The remnants of the \”old\” Sears (of which Eddie is still a major secured creditor), is now suing the new owner (Eddie) for $57.5 million, which they say is owed to them, ($41.3 million for credit card and cash transactions that occurred before the sale closed, as well as $16.2 million for a portion of February rent). Transform (Eddie) has asked for the court to mediate and resolve the issues between the two businesses, (Eddie and Eddie, so to speak). They alleged that the old Sears (Eddie) intentionally delayed vendor payments and shortchanged on inventory. Does that sound like the Eddie \”fast buck\” Lampert that we\’ve all become to know? You betcha!!

As in all bankruptcies, Sears would be protected from having to fully pay its debts and unpaid inventory. So, the creditors are left holding the bag, so to speak. That\’s why the huge initial outcry from the old Sears creditors urging Sears to go directly into liquidation mode, opposing Eddie\’s pursuit to acquire Sears out of bankruptcy. They were betting that more of their losses would be recovered through massive liquidation sales than in taking the risk of Eddie failing to turnaround a broken Sears, driving it into yet another bankruptcy. I would have doubled down on that bet.

However, \”abracadabra\” Eddie pulled the acquisition rabbit out of his hat (with a little help from the judge), in large part by convincing the judge that he would be saving thousands of jobs and whatever other tongue-in-cheek plan he had for a Sear\’s turnaround. Anyway, magicians will never give up the magical secrets of their tricks. And we know Eddie\’s processes throughout his 20 years of tricks are indeed magical (financial only). So, in trying to unpack the logic of this final trick I requested assistance from Mark Cohen, former CEO of Sears Canada and Director of Retail Studies and an Adjunct Professor at the Columbia Business School, who has an intelligent perspective on Sear\’s history as well as its current and future potential.

Mark said, \”He\’s trying to minimize the actual net-net price that his new Transform Holdco will pay for Sears Holdings. Yes, he\’s stiffing himself in part, but alongside other creditors of the old company in favor of himself alone in the new company. Said differently, the old company is in the possession of creditors which include Lampert himself (whose debt is secured by the way, which means he gets paid back before the unsecured creditors such as landlords). The new company is essentially solely the property of Lampert. The creditors of the old company objected to the sale of the company to Lampert and favored liquidation but were overruled by the court. Eddie is screwing everyone he can as he goes on his merry way intent on pursuing his delusional business plan while he inevitably will continue to strip the assets that remain in the new company as he did with the old. This is his financial engineering modus operandi.\”

So, this new trick appears to be Eddie attempting to stiff the old Sears, that he owned and was a creditor, in part with others, in favor of Transform Holdco which he owns by himself. This could very well end up being another illusion, one in which he once again pulls cash out of a proverbial \”hat\” that he puts into his pocket.

However, a recent New York Post article informed that US Bankruptcy Judge Robert Drain weighed in on the contentious financial dispute between (old) Sears and Transform Holdco, (new Sears). \”Drain seemed to side with Sears, which says Lampert\’s ESL swiped tens of millions from its coffers in the days before it closed on a $5.2 billion deal to create a new, smaller Sears chain with 425 stores. The judge warned that if ESL does not return the funds – about $14.6 million in credit card receivables and $18.5 million in cash – that it could be in violation of an automatic stay and liable for damages.\”

Apparently the judge doesn\’t believe in magic.

So, full circle. Yes, \”abracadabra\” Eddie will turn Sears into a historical iconic brand – a great American symbol of how ego, professional ignorance and ultimately greed can turn a great icon into an iconic failure.