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Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bonus
My question involves labor and employment law for the state of: IL
I was hired by Sears on April 2018 - with Sign on bonus as mentioned below.
You will receive a one-time sign-on bonus of $5,000 (Net). This sign-on bonus will be payable on the pay
period following thirty (30) days from your start date. In the event you voluntarily terminate your employment
with Sears or are terminated by Sears for misconduct or integrity issues within twenty four (24) months of your
start date, you will be required to repay the full amount of the payment paid to you, including any taxes
withheld, unless prohibited by law, to Sears within thirty (30) days of your last day worked.
On October 2018 - Sears filed bankruptcy protection. Part of Sears assets were acquired by new company.
New company TransformCo, referred to as "New Sears" is an American privately held company formed on February 11, 2019, to acquire some of the assets of Sears. The new company is owned by ESL Investments.
On April 2019, I was offered to come as employee to Transformco. I have offer letter in pdf it also contains some arbitration part it is about 6 pages document. I am attaching towards the bottom.
In November 2019, I have decided to leave Transformco and also thought that I am not obligated to pay back the sign on bonus. Now I received notice saying that I have to payback the sign on bonus. My agreement with Sears is still valid? Is Transformco legally allowed to make a claim and make me repay? - Please advice.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
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rk_grp
On April 2019, I was offered to come as employee to Transformco. I have offer letter in pdf it also contains some arbitration part it is about 6 pages document. I am attaching towards the bottom.
Or not....
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rk_grp
In November 2019, I have decided to leave Transformco and also thought that I am not obligated to pay back the sign on bonus. Now I received notice saying that I have to payback the sign on bonus. My agreement with Sears is still valid? Is Transformco legally allowed to make a claim and make me repay?
You've provided us with no information that would allow for the conclusion that the agreement is not valid. Whether Transformco is a successor in interest to Sears with standing to enforce that agreement isn't something that we can determine without reading the agreement (as well as the agreement you signed with Transformco) and without knowing exactly what Transformco purchased and how that purchase was structured.
In other words, the best possible answer anyone can give you based on your post is "maybe." For $5k, it might be worthwhile to seek a consultation with a local attorney and to pay for a letter argues you shouldn't be liable and, maybe, which offers some sort of compromise (e.g., payment of $2,500) to resolve the dispute. The alternative would be to tell Transformco to pound sand and see if the folks there think it's worthwhile to sue you (presumably in small claims court) over $5k.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
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pg1067
Or not....
You've provided us with no information that would allow for the conclusion that the agreement is not valid. Whether Transformco is a successor in interest to Sears with standing to enforce that agreement isn't something that we can determine without reading the agreement (as well as the agreement you signed with Transformco) and without knowing exactly what Transformco purchased and how that purchase was structured.
In other words, the best possible answer anyone can give you based on your post is "maybe." For $5k, it might be worthwhile to seek a consultation with a local attorney and to pay for a letter argues you shouldn't be liable and, maybe, which offers some sort of compromise (e.g., payment of $2,500) to resolve the dispute. The alternative would be to tell Transformco to pound sand and see if the folks there think it's worthwhile to sue you (presumably in small claims court) over $5k.
I agree that it would be difficult to say with certainty that the original agreement with Sears is not binding for Transformco for the same reasons stated above. We just don't know the details about the sale. However, since you are not property to be bought and sold, and since Transformco is not buying Sears as a whole, but rather only buying some of the assets of Sears the question would be as to whether or not your contract with Sears was an asset that could be sold separately.
I don't think it is, therefore I would probably go the "pound sand" route and ignore them unless they actually file something in small claims court.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
When a company is acquired through bankruptcy or otherwise, they acquire all the assets and liabilities of the company acquired. OP is an employee with a contract with the acquired company. That contract was acquired by Transformco. OP is not inventory, equipment or other. They were an employee with a contract.
OP owes the return of the signing bonus.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
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budwad
When a company is acquired through bankruptcy or otherwise, they acquire all the assets and liabilities of the company acquired. OP is an employee with a contract with the acquired company. That contract was acquired by Transformco. OP is not inventory, equipment or other. They were an employee with a contract.
OP owes the return of the signing bonus.
Wrong. They bought the surviving assets, not liabilities.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
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PayrolGuy
Wrong. They bought the surviving assets, not liabilities.
Agree. Obviously, the proposition that the acquisition of a company is an all-or-nothing proposition ("all the assets and liabilities") is wrong and indicates a substantial degree of ignorance about the subject. It is, without question, possible for Company X to acquire only some of the assets of Company Y (without acquiring any liabilities). Or Company X could acquire all of the assets of Company Y without acquiring any liabilities. It is, of course, possible for Company X to acquire some or all of Company Y's assets and also some or all of Company Y's liabilities. It is also possible for Company X to acquire some, most or all of Company Y's shares (assuming Company Y is a corporation) without directly acquiring any of Company Y's assets or liabilities.
In the situation mentioned by the OP, the extent to which TransformCo (actual name Transform Holdo LLC) acquired any of Sears' liabilities (Sears Holdings Corp. to be specific) is irrelevant to the legal issue raised by the OP, so I'm unsure why the issue of liabilities was even raised. However, it appears (without digging too deep into the mountain of publicly available information) that TransformCo acquired some of Sears' assets and none of its liabilities.
And, as noted above, it is impossible to draw any sort of certain conclusion about the enforceability of the OP's agreement. For what it's worth, while I understand "llworking's" point about the OP not being "property to be bought and sold," I don't necessarily agree with the conclusion. Nevertheless, the "pound sand" response isn't entirely unreasonable, although it does carry the risk that the OP might get sued and held liable for interest, costs and attorneys' fees in excess of the $5k being demanded.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
I received another notice today - stating below.
Unless the amount is paid to Transformco on or before 2/5/2020, we will forward your file to RMS collection Agency. RMS will contact me directly.
I don't understand why they don't want to going through small claim court.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
Because corporations must be represented by an attorney and attorneys cannot appear in small claims court.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
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rk_grp
I received another notice today - stating below.
Unless the amount is paid to Transformco on or before 2/5/2020, we will forward your file to RMS collection Agency. RMS will contact me directly.
I don't understand why they don't want to going through small claim court.
They are not immediately taking it to court because they know that their potential case is iffy, and they would rather just send it to a collection agency who will just harass until you hopefully (in their eyes) get tired of it and pay. Its also possible that the threat to send it to collections, is just that, a threat that they won't actually act upon.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
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PayrolGuy
Wrong. They bought the surviving assets, not liabilities.
You will have to show evidence of that. There is nothing in the record that says they bought only assets. In fact the record shows that TransformCo increased the bid before the auction to include the liabilities of Sears. Buying assets only is something done when there is a liquidation. Sears was not liquidated. It was purchased.
Just goes to show a substantial degree of ignorance about the subject.
OP was an employee of Sears and is now an (or was) an employee TransformCo. TransformCo acquired the contract. He owes the signing bonus under the terms of that contract.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
Not the best cite https://en.wikipedia.org/wiki/TransformCo
but as you haven't posted any cites I'll go with it.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
In the same source it says this:
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In February 2019, it was announced that a U.S. bankruptcy judge approved the sale of the most lucrative part of Sears Holdings to Edward Lampert allowing the surviving part of the company that operates both Sears and Kmart to remain in business at the expense of suppliers, landlords, employees, pensioners, the U.S. government, and other creditors. Kmart would have 202 locations after the sale is completed
Also:
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In February 2019, the company finalized the acquisition of 425 stores (223 Sears and 202 Kmart) from Sears Holdings for $5.2 billion.
The were purchased not liquidated. OP owes the money.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
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Edward Lampert allowing the surviving part of the company that operates both Sears and Kmart to remain in business at the expense of suppliers, landlords, employees, pensioners, the U.S. government, and other creditors.
"...at the expense of a bunch of creditors" sure sounds like no liabilities when with the sale.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
That doesn't mean that they can't enforce a contract for a signing bonus. Besides, that signing contract is not a liability. It is an asset in this case.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
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budwad
That doesn't mean that they can't enforce a contract for a signing bonus. Besides, that signing contract is not a liability. It is an asset in this case.
Oh budwad, they didn't even by all of the assets. And I certainly am willing to bet they didn't buy one that could turn into a liability at the drop of a hat.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
Now you are making stuff up. I said what I had to say. Done.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
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budwad
Now you are making stuff up. I said what I had to say. Done.
And what am I making up? You completely misread the site you posted.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
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budwad
In the same source it says this:
Also:
The were purchased not liquidated. OP owes the money.
The entire company was NOT purchased. Only some of the assets were purchased. They did not purchase liabilities. The question is whether or not they purchased employee contracts of the specific employees to whom they offered jobs, and whether or not those contracts were even an asset that could be purchased.
Seriously Bud, you don't know enough about the buying and selling of large corporate businesses that are in bankruptcy to understand the terminology that you are reading if you believe that what you quoted indicated that they bought the whole company.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
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doucar
Because corporations must be represented by an attorney and attorneys cannot appear in small claims court.
That's not correct in the OP's state (and, in fact, most states allow attorneys in small claims court).
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
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llworking
The entire company was NOT purchased. Only some of the assets were purchased. They did not purchase liabilities. The question is whether or not they purchased employee contracts of the specific employees to whom they offered jobs, and whether or not those contracts were even an asset that could be purchased.
Seriously Bud, you don't know enough about the buying and selling of large corporate businesses that are in bankruptcy to understand the terminology that you are reading if you believe that what you quoted indicated that they bought the whole company.
Complete and total diarrhea of the mouth. Now you, the account, is an expert in corporate actuations in bankruptcy law. Why don't you explain the terminology that you believe I don't understand.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
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budwad
Complete and total diarrhea of the mouth. Now you, the account, is an expert in corporate actuations in bankruptcy law. Why don't you explain the terminology that you believe I don't understand.
You keep stating that they purchased the whole company when the information you cited clearly shows that they did not. I just don't understand why you ALWAYS refuse to admit that you got something wrong. Several other people besides me have tried to explain that to you in this thread.
And by the way, sales of companies, in and out of bankruptcy, is a required subject for an accounting degree.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
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llworking
The question is whether or not they purchased employee contracts of the specific employees to whom they offered jobs, and whether or not those contracts were even an asset that could be purchased.
So where could the OP find this information?
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
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bcr229
So where could the OP find this information?
He/she would probably need to take the contract he originally signed to an employment attorney for an opinion as to whether or not it was a saleable asset. I don't know how he could find out whether or not the contract was actually purchased by the new company.
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Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo
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llworking
You keep stating that they purchased the whole company when the information you cited clearly shows that they did not. I just don't understand why you ALWAYS refuse to admit that you got something wrong. Several other people besides me have tried to explain that to you in this thread.
And by the way, sales of companies, in and out of bankruptcy, is a required subject for an accounting degree.
I never said that TransformCo purchased the entirety of Sears.
It is obvious from what I posted that TransformCo did not purchase the entirety of Sears. But it stands to reason that if OP is receiving correspondences saying they owe the signing bonus that TransformCo purchased the portion of Sears that OP worked for.
You don't have any more info than I have on what TransformCo purchased. But if that part of Sears that was purchased has the contract with OP, then they owe the signing contract.