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  1. #1
    Join Date
    Jan 2020
    Posts
    3

    Default 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.

  2. #2
    Join Date
    Jul 2018
    Posts
    1,988

    Default Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo

    Quote Quoting rk_grp
    View Post
    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....


    Quote Quoting rk_grp
    View Post
    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.

  3. #3
    Join Date
    Oct 2006
    Posts
    15,939

    Default Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo

    Quote Quoting pg1067
    View Post
    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.

  4. #4
    Join Date
    Nov 2013
    Posts
    6,671

    Default 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.

  5. #5
    Join Date
    Oct 2016
    Posts
    3,587

    Default Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo

    Quote Quoting budwad
    View Post
    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.

  6. #6
    Join Date
    Jul 2018
    Posts
    1,988

    Default Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo

    Quote Quoting PayrolGuy
    View Post
    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.

  7. #7
    Join Date
    Jan 2020
    Posts
    3

    Default 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.

  8. #8

    Default 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.

  9. #9
    Join Date
    Oct 2006
    Posts
    15,939

    Default Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo

    Quote Quoting rk_grp
    View Post
    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.

  10. #10
    Join Date
    Nov 2013
    Posts
    6,671

    Default Re: Sign on Bonus - Sears Bankruptcy - New Company Acquires - Resignation - Return Bo

    Quote Quoting PayrolGuy
    View Post
    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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