Sears bankruptcy 2018: workers fight for severance pay

Sheila Brewer had been working at Kmart in Rockford, Illinois, for 17 years as a data and customer service lead when her district manager announced in April that the store would shutter in September.

Kmart, under parent company Sears, was once a thriving American department store, but saddled with debt and declining sales, it had been dying a slow death for years. The 47-year-old Brewer heard there were Sears and Kmart store closures, but she didn’t think trouble would hit her store, which she says was always quite busy.

When the closure was announced, store associates, Brewer included, received the news with equal parts panic and devastation, but Brewer says they were reassured they’d receive an 8-week severance package. But after just two weeks of payments, the money stopped coming. Brewer received a letter in October notifying her that Sears had filed for bankruptcy, and so her checks were going to stop arriving. The letter recommended she file an additional claim, which would add her to a queue of employees whose severance would be acknowledged after Sears goes through a restructure.

“It has been devastating,” Brewer told me over the phone. “In addition to losing my job and having anxiety about who is going to hire me, since I haven’t had a job interview in almost 20 years, I am counting on this money. I’m already behind on my rent, and I am the sole provider for my family,” which includes her husband and her 2-year-old grandson.

Carrie Gleason, a campaign manager with the retail advocacy group Rise Up Retail, says she’s heard of thousands of Sears and Kmart employees who’ve said their severance has been cut off or have not received anything at all. So the organization partnered with more than 60 Kmart and Sears employees, including Brewer, to send a letter last Thursday to Sears owners, creditors, and investors, requesting they consider employee rights as Sears prepares to restructure.

It reads, in part, “While we understand that Sears and Kmart must make changes to survive, we do not believe it is fair that financial firms stand to profit from Sears’ bankruptcy while employees like us are asked to sacrifice.” The letter also asks that Sears guarantee severance to its employees and create a fund to help laid-off workers recover from employment loss. (Sears did not respond to a request for comment from Vox.)

“They really are just doing us wrong,” says Brewer. “I didn’t think I would be treated like this, considering Kmart was my family and I was loyal to them.”

Sears struggled for years — but its executives still might walk away with millions

Although the slow and painful death of Sears can be partially attributed to the rise of e-commerce and the ultimate decline of the American department store, retail experts have also blamed Sears CEO Eddie Lampert, who stepped down in October in conjunction with the bankruptcy filing.

Lampert has been accused of purposely profiting from Sears’s decline. He sold off valuable assets like Sears real estate to keep the company afloat, but then failed to invest in any store improvements, instead choosing “flopped retail experiments” that experts have described as a “slow-moving train wreck.” And per Forbes, “He has sold off assets to the same ESL holdings, taken over the real estate of most of the stores that he collects rents on through Seritage (another of his companies) and managed to make himself the company’s biggest creditor in the process.”

Instead of reinvesting funds into the company, Lampert is walking away from the Sears bankruptcy even richer, while over 175,000 retail employees have lost their jobs and tens of thousands more are still on the line.

In the midst of laying out the full damages from Sears filing for bankruptcy — including the closures of hundreds of stores — bankruptcy court filings revealed that the company is still hoping to allot up to $25 million in bonuses to company executives. It was this news that triggered employees like Onie Patrick, another former Kmart employee, to get involved with Rise Up Retail’s letter.

Patrick, who worked for Kmart for nine years, is not eligible for severance because she was part-time. But after reading that tens millions of dollars could go to executive bonuses, she is fighting for Sears to claim responsibility in sending some sort of payment to all laid-off employees.

“These executives are going to get millions, but what about the people that worked for them?” she says. “I was offered a front lead position somewhere else one year ago, but I stayed because I loved working for Kmart, even though the company had been on a raise freeze for years. They can’t pretend now like they owe us nothing.”

Patrick, a mother of five children ages 1 to 11, says reading about executives potentially receiving millions of dollars in bonuses while she’s struggling to pay for diapers “is a slap in the face.”

The treatment of the C-suite versus associates in retail is striking

If the saga of how Sears executives might take home gargantuan bonuses while retail associates get nothing sounds familiar, that’s because it’s essentially the same story that happened with Toys R Us. After the toy chain went out of business for good, several executives got millions of dollars in bonuses while more than 30,000 employees were told they’d receive no severance pay. (After a months-long battle, the private equity owners of Toys R Us finally agreed to allot $20 million to a fund to provide employees who qualify with severance, which will be distributed in 2019.)

“The contrast we are seeing between the treatment of hard-working women like Sheila and Onie to the hundreds of millions executives like Eddie Lampert have made is sick,” says Gleason. “It demonstrates there’s something that’s wrong with our economy.”

Talks are still underway for Sears’s restructuring, so Gleason says Sears workers still might stand a chance at replicating the Toys R Us employees’ success. Sears just secured a $350 million loan last week to keep its stores open during the holiday season, but its future is still unclear. According to the Wall Street Journal, the company is considering a buyout by liquidators that want to shut down the chain for good, which would result in the loss of thousands more jobs, and so Rise Up Retail believes timing is crucial right now — but Gleason thinks it’s likely the Sears workers will have to fight for severance.

“There’s this idea in America that if you work hard and are loyal, your work is respected and you can thrive,” she says. “But that hasn’t been the case with the way the current retail workforce is being treated.”

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