Sears Holdings Corp. (fka SHLDQ)

[inouttrader]

SHORTS ARE SWEATING SOO MUCH YOU CAN CREATE A SWIMMING POOL. ...LOL..JMO

[Volcano]

Super explosion Monday

[Orion1972]

good read, thanks.

[Scotttrader80]

Since Sears evidenciary hearings are scheduled for both Monday and Wednesday according to Drains calendar there's a better than good chance things will carry over to Wednesday.

so much has been filed i can't see any way this will not carry over into wednesday.

[justthefactsmam]

finished going through the transcript and exhibits to the auction sale.

of note was a comment that sears had specifically picked this particular venue to file for bankruptcy because of the court's favorable treatment of workers. certainly seems the argument of keeping 45k jobs might loom large.

additionally, after seeing all of the coverage of federal workers on furlough and not being paid standing in food lines and worrying about losing their homes, it would be a difficult decision to rule for liquidation and throw them out of work at this time.

esl did step up in its final offer to guarantee some 40k+ jobs through sears fiscal 2020 which ends january 31, 2020. so if the judge approves, those workers will have at least 1 year of guaranteed benefits which i believe would include severance.

in my post 17653 i laid out the major concerns raised by the committee of unsecured creditors. below are the changes esl made to its bid which were those final changes leading to shc agreeing to make esl's offer an approved bid.

(1) esl agreed to assume the entirety of the $350 MM junior dip which will be rolled over into newco
(2) newco to pay $19 MM in transfer taxes
(3) newco to assume $4 MM in mechanics liens
(4) newco to purchase the cash and store registers estimated at $17 MM
(5) debtors to retain $13 MM in hurricane insurance proceeds
(6) newco to acquire proceeds of ship sale to service.com
(7) $35 MM payment at closing, esl permitted to credit bid all of its debt claims that would be allowed and no collateral attack on any conversion of debt into newco equity or any transaction approved by the court. THIS POINT GOES BACK TO AN EARLIER POST I HAD MADE IN WHICH IT WAS SPECIFICALLY DISCUSSED THAT ESL'S DEBT CANCELLATION WOULD BE CONVERTED INTO NEWCO STOCK. THIS IS THE FIRST AND ONLY MENTION OF NEWCO STOCK THAT I HAVE SEEN OTHER THAN PART OF NEWCO'S CONSIDERATION TO DEBTORS WOULD BE NEWCO COMMON STOCK AND WARRANTS.
(8) esl would retain deficiency in 507(b) claims subject to the following limitations: (i) esl to waive recovery on account of 507(b) claims and deficiency claims related to seritage, lands end or other transactions involving intentional misconduct by esl, (ii) esl recovery on account of 507(b) claims capped at $50 MM and any other recovery beyond $50 MM would be shared pro rata with unsecured claims and (iii) esl would not use any 507(b) claim to block any confirmation of any plan by sears.

shc approved the above changes and approved esl's bid as a confirmed bid. they closed by saying "in making our decision, we did take into account the court's direction at the chambers conference today (1/19/19) and trying to come up with a solution where the debtors could attempt to maximize value, preserve thousands of jobs, and also eliminate risk of administrative insolvency where possible."

the judge did warn sears there was still risk of administrative insolvency and that financial burden would fall on sears for anything beyond what esl had agreed to absorb.

lawyers for the unsecured creditors objected to the approval of esl's bid.

so, this is what will be discussed this coming week. so much has been filed i can't see any way this will not carry over into wednesday.

[TRUSTUNITS1000000]

They could always get back in

[TRUSTUNITS1000000]

Going to get interesting around here, maybe with previous asset sale when they were in trouble the shareholders going back will sue

[Happycoins]

If Sears stays open and the judge approved
the deal does anyone have an estimate of where the stock might head I am thinking 1.50
PPS this is truly a risk reward type of stock.

[Scotttrader80]

The fate of the 126-year-old chain will be decided upon by Judge Robert Drain in what is expected to be a two-day hearing on Monday, Feb. 4 and Wednesday, Feb. 6. Drain has already shown a propensity for pushing Lampert and Sears to draft a deal that would save jobs, having twice granted the parties more time in order to craft a resolution when it seemed like they had reached a breaking point.

Things are looking

UP

[StrategyTrader]

Blue skies it is even though short sellers crying doom and loom ignore the static on this board keep an eye on the wolves dressed with sheep wool hanging amongst true longs on this board :)

[StrategyTrader]

Great ultimate ruling by judge tomorrow after listening to the objections how the judge will handle this obviously my bet on 45k employees. Will be the dominating factor see you folks this week going to be very interesting both exponentially and bull sht RIP short sellers

[Hussybuckle]

I was just a Sears in Montclair Ca yesterday. Huge sales, bought my kid a bunch of stuff. I asked the lady when they are closing, she stated they were just notified that they ARE NOT closing...so go figure.

[November61]

Losing Sears will not look good on Trump Agenda.

Not only Sears will survive, but might even be a leader about Making America Great Again.
No political talk from my part, just trying to connect dots together.

So I see blue skies.

[Orion1972]

new story!

https://www.cnbc.com/2019/02/03/bystanders-of-sears-downfall-will-get-their-day-in-court-monday.html?__source=yahoo%7Cfinance%7Cheadline%7Cstory%7C&par=yahoo&yptr=yahoo

[Scotttrader80]

Bankruptcy judge approves up to $25.3 million in bonuses for Sears’ execs

https://www.rep-am.com/news/news-business/2018/12/14/bankruptcy-judge-approves-up-to-25-3-million-in-bonuses-for-sears-execs/

I'd sell my whole vintage Radio collection to buy up every .08 cent share I could get my hands on. I have a bunch of them like the ones listed here

https://www.retroradioshop.com/

[andyk803]

So tomorrow is almost here and the big day we all have been waiting. What can we realistically expect tomorrow and the rest of the week.

[howaboot]

How to LISTEN IN to the court proceedings.

http://www.nysb.uscourts.gov/telephonic-appearances-white-plains

CHAPTERS 7 or 11 (ONLY) - DO NOT CONTACT CHAMBERS TO ARRANGE A TELEPHONE APPEARANCE
Effective 8/30/2018, parties who wish to "listen only" to a hearing telephonically may do so by registering with CourtSolutions at www.Court-Solutions.com.
Parties who wish to participate in a hearing telephonically on a "live" line must submit a dial-in request to CourtSolutions at www.Court-Solutions.com. If the request is approved, the party will receive an email from CourtSolutions with dial-in information.
Generally, counsel and pro se parties are not permitted to participate "live" telephonically in any hearings if they intend to submit or question evidence, including the examination of witnesses, without prior approval from the Court.

[howaboot]

This is what I think happens here, IMO only.

1. ESL (holdco) buys the better performing Sears assets. Those stores are repurposed into Sears/Whole Foods combo stores. With that repurposing the rents are renegotiated and Seritage scores.

2. SHLDQ now has $5B from the sale AND $5B offsets from the NOL. Current owners of SHLDQ stock stay here with SHLDQ, including Lampert's shares.

3. SHLDQ sells off the remaining properties and collects funds from those sales. The NOL offset those proceeds and other things. Seritage scores again from this because they can now charge more for rent from those formers sears stores.

4. At some point in the future. Holdco and SHLD "merge" thus "transferring" the NOL to Holdco.

Where am I out in left field here?

[Orion1972]

besides the one slide (docket 2339 pg. 85) about the common stock I have seen no mention liquidation on the commons. now there is alot of material but did you see anything? Also are SH not included in the tax structure because the SH taxes are seperate from the deal because they are due by the SH holder themself. sorry if the is a bad quetion just starting this..

[justthefactsmam]

had esl's bid not been an approved bid by shc as a result of the auction process, it had the following plan for achieving its wind down recoveries which assumed 4 waves of GOB's

(1) wave 1 - 142 stores beginning on 10/28/18 ending on 1/5/19
(2) wave 2 - 40 stores beginning on 11/18/18 ending on 1/26/19
(3) wave 3 - 80 stores beginning on 1/3/19
(4) wave 4 - 425 stores beginning on 1/21/19

since esl's bid was approved by shc and is pending approval by judge drain, only the first 3 waves have been implemented. so, if esl's bid is approved by the court, seems like shc's wind down liquidation involves the first three waves consisting of 262 stores, all of which have already commenced the liquidation process with their GOB's.

so, the unsecured want wave 4 included in the liquidation, esl and sears do not, and that's what will be decided by drain this coming week.

[justthefactsmam]

if esl's bid is approved by the judge, following is how shc might be utilizing its cash while liquidating everything not included in the apa.

this is from docket 2344 and originally would have applied to a complete liquidation in the event esl's bid were not to be approved by shc as part of the auction process. am assuming, while it was not developed for a smaller universe of assets, the framework would be similar.

again, can not recall if esl has subsequently stepped in to mitigate any of these items.

at any rate, if esl's bid is approved by the judge, this may be the primary way in which the unsecureds will be paid.

(1) gross proceeds from GOB sales of merchandise inventory. as inventory is sold, expenses related to the inventory liquidation are deducted from proceeds, resulting in an assumed orderly liquidation inventory value to the estate of approximately 90%

(2) the first $240 MM of previously unencumbered sale proceeds realized (which are segregated into a separate account) after which previously unencumbered asset sale proceeds are used to repay the $350 MM junior DIP in full; after the junior DIP has been repaid in full, additional asset proceeds are used to pay administrative expenses and unsecured creditors.

(3) the imposition of a 4% charge on encumbered assets sold throughout the case pursuant to 506(c) of the BC, with the exception of the first lien and prepetition ABL collateral (including non-insider portions of the FILO and citi L/C), and junior DIP collarteral due to the 506(c) waivers granted to those lenders solely in their capacity as DIP lenders

(4) excess proceeds (proceeds above lien value) from sales of encumbered collateral.

footnote: prior to 1/14/2019, the company is assumed to operate in the ordinary course while transitioning from a 505 to a 425 store footprint

[Scotttrader80]

An Interesting week coming up, place your bets!

[growingpains]

PPS ^ Short Loans Cancelled Short assets poof gone forever

[justthefactsmam]

some or all of the following will be concerns raised by unsecured creditors which will be argued in front of judge drain tomorrow.

following are the major concerns raised by counsel for the unsecured creditor's committee prior to the start of the auction held in weil's offices. while some of these concerns may have already been addressed and resolved, i have not delved into that aspect at this time. maybe some of you know and can comment.

since the auction had neither commenced nor had any bid(s) been deemed successful, the lawyer addressed concerns with both esl's bid as well as the wind down proposal shc put forth:

esl's bid concerns:

(1) administrative costs. thought $300 million was too low. these are the legal and professional fees shc is incurring as a result of chapt 11
(2) felt there was an inherent conflict with esl's credit bid
(3) issues with leases and releases vis-a-vis the credit bid
(4) feels the $35 million release is inappropriate
(5) concerned esl's bid included assets which the debtors did not own asking how debtors could sell something they did not own
(6) didn't feel there were adequate assurances of future performance
(7) objected that esl did not provide them with a copy of esl's business plan
(8) thinks bid includes consents esl will be unable to provide
(9) concerns over (i) conditionality of closing items (ii) milestones as well as (iii) inability to pay 503(b)9 claims and other administrative expense claims. FYI, a 503(b)9 claim deals with a supplier's ability to be paid for goods delivered within 20 days of a bk filing.

shc wind down concerns:

(1) concern about a 507(b) claim which shc footnoted but the committee feels should be valued at zero as it is impossible to prove. FYI, a 507(b) claim is one in which a secured creditor is granted a super priority over all unsecured creditors as well as administrative claims.
(2) difference of opinion between shc's liquidation value of real estate versus that of the unsecured creditors. the unsecured creditors feel the real estate was valued between $300 million - $600 million low.
(3) the wind down doesn't provide for litigation claims
(4) unsecured creditors feel that esl's debt should be surcharged whether or not it is deemed to be a beneficiary of a 506(c) waiver. FYI, a 506(c) waiver grants the ability to avoid fees associated with preserving or disposing of properties otherwise subject to these fees.

after the comments from the lawyer for the unsecured creditors, esl's lawyer said the following:

we will be -- we disagree with virtually everything you said though we love you dearly, and we will be sending you a business plan right after this as well as the ABA (sic, think that should be the "APA" which is the asset purchase agreement). thank you

[buxcapital]

I am not betting on that i think it can happen that’s way I said it can see a pop Monday but will not hold and will drop hard once’s eddies plan comes out!

[StrategyTrader]

Send her on Twitter to stop bashing Sears I did many others as well

[StrategyTrader]

Short sellers are betting on the huge odds that Judge will not approve the sale when approved this week short sellers will pay hefty :)

[buxcapital]

I don’t think many people bought when this was .65-.79 that’s gonna help shorts profit faster .65 if far away and a dream so no worries about anything higher boys and girls get ready for the win!

[buxcapital]

I think will be fine by the EOW Monday flippers will pop this but before the weeks up I think .30s will see who right or closer To the truth !

[StrategyTrader]

Short sellers terrified from the inevitable ripp short sellers starting next week.

[StrategyTrader]

Short sellers ripped tomorrow be aware

[growingpains]

40,000 people & countless lives will prevail & the few greedy rebellious souls will LOOSE all- REMemBeR That

[growingpains]

Judge Drain is Highly Educated Shorts Borrowed $, time & Greed will fail

[jimr1717]

8 cents soon hope you sold

[StockRoomBully]

Well, if you watched the interview. She had admitted buying shares and doubling her profits back then. She Just bitter . imo

[emit]

Hope to be smiling with you on the next winner.


wtg


emit...

[IL Padrino]

Good info. We still have a long way to go it seems.

[inouttrader]

BUY,BUY,BUY...LOAD UP. .AS MANY COMPANIES BEEN DOING...JMO

[swingingRichard]

Review the volume and the dollar-volume. There is nothing to support the idea that "whales" are in the fiasco. SHLD is screwed.

 
   Volume          Dollar Volume 
 1,534,740           $ 845.89k

[Orion1972]

I wonder if Warren knows this law.

Obstruction by Intimidation, Threats, Persuasion, or Deception (18
U.S.C. 1512(b)
The second group of offenses within §1512 outlaws obstruction of federal congressional, judicial,
or administrative activities by intimidation, threat, corrupt persuasion, or deception, 18 U.S.C.
1512(b). Parsed to its elements, subsection 1512(b) provides that:
I. Whoever
II. knowingly
A. uses intimidation
B. threatens, or
C. corruptly persuades another person, or
D. attempts to do so, or
E. 1. engages in misleading conduct60
2. toward another person,
III. with intent to
A. 1. a. influence,
b. delay,

[CaptStockWolf]

The thing that annoys me is crazy ppl like senator warren coming out of the dumpster bashing sears trying to influence the judges decision.

[StockRoomBully]

LET THE JUDGE DECIDE

SO WE GONNA ACT LIKE WE ARE NOT ANNOYED BY THESE WANNABEE JUDGES TRYNA FIGURE OUT UNQUESTIONING EVERY DOCKET.

NOTICED BIG WHALES BOUGHT AND CHILLIN WAITING ON JUDGE TO RULE.

GEEZ GIVE IT A BREAK. JUDGE WILL MAKE THAT DECISION. THAT SIMPLE.

ITS LIKE GOING ON YOUR FIRST DATE. YOU THINK THAT DATE NOT HAD ANY DOUBTS NOT SHOWING UP. BUT DID THEY?

WHEN THEY THOUGHT IT WASNT GONNA HAPPENED
5.2 BILLION
JOB SAVE

WHAT HE DID WWSNT A COMMON THING TO DO THEY WANTED IT TO DIE

.THE REWARDS OUTWEIGHS THE RISK

[CaptStockWolf]

http://www.woodllp.com/Publications/Articles/ma/030301.htm from my understanding it makes all the sense to keep the commons because of Nols tax benefit. If there is a transfer of ownership then section 382 of the tax code kicks in limiting the amount of nols that can be used.

From the article

now If section 382 applies, it limits the amount of taxable income that can be offset by NOL carryovers to an amount equal to the value of the loss corporation multiplied by the long-term tax exempt rate. Thus, even where section 382 applies, it does not disallow or eradicate NOLs. Rather, it limits the NOLs that can be used in any one year to offset income following the ownership change.

[trades4ever74]

So is Sears done. Sears in novi michigan is having a store closing sale. Are they all closing down or is this a good time to buy shares.

[justthefactsmam]

Judge Drain has said he expects the hearing will spill into multiple days and that he could issue his ruling from the bench at the end of the process. The filings show that Sears hopes to have a decision approving the sale by Friday February 8, and that it hopes to close the sale by February 19.

Not all the objections filed in the case are seeking to have the the company liquidate. Most are arguing specific objections to one or more terms of the proposed sale. If Judge Drain agrees with some of the objections, it could kill the deal and leave no choice but liquidation.

So far, the judge has appeared to be giving Sears every chance to save itself. At a January 18 hearing he said "it would be a very good thing" if there were a way to save the 45,000 jobs at Sears and Kmart. But those employees are not the top priority under the nation's bankruptcy law.

Instead, the hearing will focus on returning as much money as possible to those who are owed money from Sears. And the committee of major creditors objecting to the deal are owed more than $3 billion. They have argued repeatedly they don't believe it makes sense to try to save Sears. They called the plan to stay in business "nothing more than wishful thinking " and "an unjustified and foolhardy gamble with other people's money," in one of their filings.

https://www.kion546.com/news/economy/sears-moment-of-truth-is-coming/998976747

[justthefactsmam]

linda,

have you spent any time with page 85 of docket 2339?

it is put forth as an example of how a 363 exchange would/might work as a tax reorg.

deloitte cites an irs letter ruling 201025018 which they utilized to prepare this chart. although private letter rulings can not be relied on by other parties, it does provide evidence of what might be able to be done in this case. i downloaded that letter ruling and it does track with the diagram but doesn't specifically provide for shareholders.

what bothers me about the diagram example is the "strike line" between the SH's (shareholder) circle and that of the Debtor. certainly seems to imply shareholders are disenfranchised in some way. any thoughts on that?

that aside, as i see it, the diagram applies in our case in the following ways from what i have gleaned from the various docs and comments.

newco is esl and the lenders 1 and 2 are representative of the bank lenders esl lined up when they made their final bid which was approved by shc.

newco (esl) is providing $5.2 billion in consideration to debtor (shc and its various subsidiaries).

part of esl's bid was a "credit bid" which served as a cancellation of debt "cod" and which probably also served to reduce a portion of the nol benefit. in exchange for that cancellation of debt, esl (according to the transcript of the auction sale) received stock in newco.

when the debtor offered to sell esl certain assets, shc retained the unwanted assets. my assumption is the unwanted assets were the locations which were closed and are currently in the process of being liquidated an/or monetized in some way. what assets other than the announced store closures are being retained by shc i do not know.

if esl's bid is approved, shc must liquidate its remaining assets in some discrete period of time in order to preserve whatever nol's esl might be able to utilize. in other words, shc can not drag out the liquidation process for years.

deducting $1.3 from the $5.2 bid leaves $3.9 billion going to the debtors from esl. the "apa" provided for the rollover of senior debt and provided for paying off the 2020 real estate loan ($544 million) and various items associated with the second lien term notes, credit facility and pik notes ($433 million). that takes the consideration down to $2.9 billion.

seems like the fly in the ointment will be unsecured creditors. going back to the diagram, it says the debtors plan to liquidate, distributing it remaining assets to debtors claimholders (unsecureds?). guessing the unsecureds don't feel those proceeds will be enough to make them whole and they want complete liquidation.

notice also that part of the consideration to debtors from newco is common stock and warrants of newco (which debtors say they may sell. possible that unsecureds don't want to have to take stock and warrants in newco as part of their consideration (although the judge could force that).

SO, while this diagram doesn't show any consideration going to common shareholders, the provisions of executing a 363 exchange certainly do indicate the composition of newco be similar to that of what was acquired. this is where all of the discussion of not having commons wiped out comes into play.

it certainly seems since the debtors are getting newco shares and newco is not getting shc shares that there will be a shldq cancellation with the elephant in the room being whether or not newco shares are distributed to shc shareholders in some prorata way.

if shares of newco are considered to be of greater value than the shares being surrendered, then one could expect the exchange would not be 1 to 1.

so much is left undone regarding how this restructuring will be handled pending judge drain's ruling this week. if approved, then there will begin some real work on a por, holdco's structure, liquidation of those things for which sears will be responsible, the execution of a cooperation agreement (not the exact term but a docket was recently filed indicating that would be coming).

posting excerpts from a very recent article commenting on judge drain's activities this week after i submit this.

[BBANBOB]

I know and shouldn't have said you, should have said DO ANY REALLY BELIEVE he would!!!!!!!!! my bad

[linda1]

I read in a WMI 10-Q filing that it had approx $ 7.5 B
in NOLs when it exited Bankruptcy - which were
later reduced to approx $ 6 B due to an ownership
change when it issued the new WMIH Commons.

If the WMI POR based the distribution of the
new Commons on the valuation of the NOLs and
remaining estate Assets, then that could explain why
the Shareholders received some of the new Commons.

$ 7.5 B NOLs = $ 7.5 B Preferred Shares.

The value of remaining estate assets = new Commons
for Shareholders.

If the Sears’ Unsecured Creditors are owed $ 3.5 B
and the Tax Attributes are $ 6 + B, then that should
equate to the Commons also receiving new Commons
for the remaining value of the NOLs.

[BBANBOB]

Linda yes there is a large unpaid debt of 13 bill, but along those same line how then did WMIH obtain a 2.7 bill $$$$$$$$$$$$ bridge loan to buy NSM a NYSE listed company

Can ya say

THINGS THAT MAKE ME GO HMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMM

I can and do

[BBANBOB]

THEY KNOCKED OUT THE APR there which as I am sure you know is , UNPRECEDENTED!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Weird chit goes on in these BK's right