Sears just followed through on its CEO's threats and sued a top tool vendor

Sears is suing a top tool vendor it says is refusing to honour its contract with the retailer.

The lawsuit follows through on threats that Sears CEO Eddie Lampert made in a blog post on Monday in a blog post on Monday.

Lampert said One World Technologies is trying to “embarrass” Sears and “take unfair advantage” of the retailer by changing the terms of its supplier agreement, or threatening to cancel its contract with Sears altogether.

One World Technologies is a subsidiary of the China-based Techtronic Industries that manufactures power tools and other products under the Craftsman brand.

The lawsuit claims that the tool vendor threatened to cancel its contract with Sears due to concerns over the retailer’s financial stability unless Sears agreed to cut back its orders, the Chicago Tribune reports.

Sears says that it has always paid its suppliers on time, and that One World Technologies is trying to take advantage of negative “rumours” and media reports about Sears’ viability to change the terms of its contract.

“We will not simply roll over and be taken advantage of,” Lampert wrote in the blog post Monday.

He said that One World planned to file a lawsuit against Sears “as they seek to embarrass us in the media to force us to let them out of their contract. But Sears has nothing to be embarrassed about — we have lived up to our word under our contract, and we will take the appropriate legal action to protect our rights and ensure that One World honours their contract.”

Sears’ stock fell 12% after the blog post was published.

One World Technologies and Techtronic Industries did not immediately respond to a request for comment.

Lampert said Sears had helped One World “build a formidable presence in the tool industry” over its nine-year relationship with the vendor. He said Sears had paid the company more than $US868 million since 2007.

SEE MORE: Inside Sears’ death spiral: How an iconic American brand has been driven to the edge of bankruptcy

Last week, Lampert told the Chicago Tribune that some vendors had been treating Sears like a “pariah” and questioning its ability to pay for orders “because there are a lot of articles that are speculating, and there are elements of truth, but they’re certainly designed to scare people.”

“If you’re a vendor, and want to do business with us, then you have to treat us like a customer,” he said. “You don’t treat us like a pariah.”

Sears’ sales have been cut in half since 2007, and the company has been closing hundreds of stores and selling off assets including real estate and brands like Craftsman to raise money. The company has also been borrowing money from Lampert’s hedge fund, ESL Investments, to keep funding operations.

There has been widespread speculation on Wall Street that the company is nearing bankruptcy, especially after Sears in March revealed “substantial doubt” about its ability to stay in business.

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