Sears' unsecured creditors filed an objection Thursday afternoon to Chairman Eddie Lampert's deal to save the company through his hedge fund, ESL Investments, requesting a public hearing to air its grievances.
In documents filed with the Southern District of New York Bankruptcy Court, the committee said it has uncovered facts that demonstrate Sears' downfall was "precipitated by years of misconduct by Lampert, ESL, and others against Sears and its creditors," in addition to the broader challenges facing the retail industry.
"This is a matter of significant public interest and should be heard entirely in open court," the committee wrote.
A hearing is scheduled for Feb. 1 at the bankruptcy court in White Plains, New York, at which the bankruptcy judge overseeing the case, Judge Robert Drain, will assess the merits of any objections.
Lampert reached a deal with Sears early Wednesday morning to acquire 425 Sears stores and other assets for about $5.2 billion. Sears' other brands include its Home Services business and Kenmore and DieHard brands.
Lampert, Sears' biggest creditor, has been under fire from the company's unsecured creditors since it filed for bankruptcy in October. The group has said there may be claims against Lampert for deals the company did while he was Sears' CEO and largest shareholder. Those deals include Sears' spinoff of Lands' End in 2014 and transactions with Seritage Growth Properties, a real estate investment trust Lampert created through some Sears properties a year later.
"Sears's downfall is nothing short of tragic," the committee wrote in the documents.
"After taking control of Sears in 2005, ESL — acting at all times at founder and namesake Lampert's direction — engaged in serial asset stripping, taking Sears's best assets out of the enterprise to shield them from the claims of other creditors and maximize ESL's investments (in Sears and other entities) in anticipation of these inevitable bankruptcy proceedings."
As part of the deal struck earlier this week, Lampert paid $35 million for the right to help fund his bid by forgiving debt owed to him through a "credit bid," people familiar with the situation have told CNBC. The deal, though, did not address potential litigation the unsecured creditors have threatened they may file over deals Lampert did during his tenure as Sears' CEO and largest shareholder.
On Thursday, the unsecured creditors group, calling ESL's bid to save Sears "nothing but the final fulfillment of a years-long scheme," said it is seeking standing to prosecute a number of claims against Lampert and ESL.
Among the claims it is lodging against Lampert, the group cited both the Lands' End and Seritage transactions. It is also demanding the "recovery of all ill-gotten gains and compensation for the damages incurred" under Lampert's leadership.
The group cast doubt on Lampert's ability to revive the company, saying ESL has "failed to set forth a business plan that offers any viable go-forward path."
"The company will continue to be hobbled by the same untenable problems, given that its efforts to resuscitate performance by shrinking has mainly been unsuccessful," wrote Moody's department store analyst Christina Boni earlier this week.
According to the documents filed Thursday, Sears closed more than 3,500 stores while under Lampert's direction. It filed for bankruptcy with roughly 700 stores, but has since whittled that footprint down closer to 400 through several rounds of store closures.
Sears has until Jan. 29 to respond to any objections to its deal with Lampert.
ESL has previously stressed that all actions taken by Sears while under Lampert's tenure were approved by the company's board.
In part of a statement delivered to CNBC through an ESL spokesperson on Thursday, the company said:
"Over the past several months, we have provided countless pages of documents to the Creditors' Committee and held numerous discussions with their advisors. We have cooperated fully with their review and remain confident that the processes we followed are unimpeachable. We reject any assertion to the contrary and will vigorously contest any effort to assert claims against ESL, its principals or affiliates concerning these transactions."