B2B Payments

Supplier Sues Sears Over Alleged Unpaid Invoices

Reports that Sears was halting its payment to suppliers ahead of its anticipated bankruptcy may be just the beginning of vendor trouble for the retailer. The Chicago Sun Times said on Friday (Oct. 19) that one of Sears Holdings' vendors is suing the company, claiming nearly $840,000 in unpaid invoices.

InGear Fashions first began working with Sears in 2012, reports said. Now, the fashion supplier has said Sears owes the money as a result of merchandise breach-of-contract charges. The lawsuit also accuses Sears of misrepresenting its financial situation with vendors. The case was filed in Cook County Circuit Court in Chicago and named Sears CEO Edward Lampert, his private equity firm ESL Investments and Sears subsidiary Kmart as defendants.

"Allowing the Sears defendants to not pay [InGear Fashions] for the monies owed pursuant to the [contract's universal terms and conditions] violates fundamental principals of justice, equity and good conscious," the lawsuit stated, according to reports.

Court documents also show InGear Fashions citing a 2014 blog post authored by Lampert about Sears' supplier payment practices.

"Across our entire vendor base, we have always met our payment obligations," the post stated. "The steps we are taking to improve our financial strength and reduce our operating losses will ensure that we will continue to be a strong business partner for many years to come."

InGear Fashions said scheduled payments from Sears were apparently canceled on Oct. 12. Sears did not respond to the publication's request for comment.

It is possible that Sears may face further legal action from other vendors following previous reports that the retailer's payments to suppliers have stalled.

Earlier this month, reports in Reuters said three suppliers reported missed payments from Sears in previous weeks. Just days after that report was released, Sears filed for bankruptcy.

"We went into business with them with our eyes open and knew this day would come one way," one vendor told the publication.

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