An attorney representing the Mall of America told the U.S. Supreme Court on Monday that it should be allowed to fight for control of the former Sears store that has been vacant since 2019.
But a lawyer representing Transform Holdco, a firm controlled by the former CEO of Sears, argued that it's too late to unwind its acquisition of the Mall of America lease from Sears during the retailer's bankruptcy restructuring.
For the justices, the crux of the case revolves around whether an appellate court has jurisdiction to review bankruptcy court decisions. But what's at stake practically is whether the mall will be able to control one of its four anchor corners, which has 200,000 square feet of space over three floors.
"The text explicitly presupposes the exercise of appellate jurisdiction, including to reverse or modify a sale order," Douglas Hallward-Driemeier of Ropes & Gray, the firm representing the Mall of America, told the justices in reference to the main statute at issue.
Sears was still a strong name in American retail when it signed a lease in 1991 for the Mall of America space. Mall owners gave the retailer a sweetheart deal: annual rent of just $10 with a 100-year lease term.
An attorney for Transform, G. Eric Brunstad Jr. of Dechert LLP, told the justices that Sears paid to build that portion of the mall. He said that Transform is meeting its obligations to the property.
"Transform has owned and maintained the building and occupied it for the last three years, has paid the taxes, has paid the utilities, has paid the rent, is fixing the roof," he said.
Sears filed bankruptcy in October 2018. CEO Eddie Lampert stepped down with the filing and then assembled Transform Holdco to buy Sears assets out of bankruptcy. The bankruptcy court approved the sale of some assets to Transform in February 2019.