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no, i don't think that. i'm holding 40k shares and i do think commons will survive in some way which is why i'm still holding.
my basis is .232 so if it gets flushed it's a scratch, not a cut, a wound, or anything fatal for me.
i still look at all of the stock esl/lampert and his other entities own and even though he might trade his debt for shares in newco (transform holdco) why wouldn't he want to get additional consideration for his commons? with only 109 million shares outstanding and he and his entities have control over 70+% of those shares, he's not giving up much to have ALL commons preserved, again, in some fashion.
also seems retaining all or a portion of the nol's is linked to common shareholder survival.
if you decide to hold on until certainty is obtained, the rush to the exits if commons are screwed will probably mean a severe buzzcut.
that could all happen this week if esl's bid is not approved by the court. even if esl's bid is approved it will probably be weeks and weeks before a por provides any certainty.
linda,
why does transform holdco have to merge with sears holdings if holdco has purchased specific assets (a lot of which gave rise to the nols at issue)?
my thought (totally uneducated by my own admission) is that the sears holding company will in fact be liquidated and go away and there will be nothing left to merge with newco.
notice in the example given on the diagram on page 85 of 157, the debtor (shc in our case) was left with the unwanted assets (i.e. the closed stores and some other things which it is liquidating) and then according to the verbiage in the example "debtor then planned to liquidate, distributing its remaining assets to debtor's claimholders. (esl is no longer a claimholder at this point).
also note on page 86 of 157 that debtor must retain more than an INSIGNIFICANT active trade or business. the complete discussion on page 86 of 157 leads me to think sch will not survive to be merged.
So you really think current shareholders are screwed??
linda,
as noted on page 78 of 157 of docket 2339, the nol's were specific to various entities within the sears umbrella. there is some discussion which seems to indicate all of the nol's might not flow as a lump sum because of that.
also, cancellation of debt may be specific to an entity and that could cause a reduction in nol's via the cod.
for instance, it would seem that the cancellation of $1.3 billion of esl debt would serve to reduce some of the nol.
deloitte is still working on those issues.
and to think i was departing for the evening.
linda, you asked:
"How can ESL’s Debt cancellation be converted
into NEWCO - Transform Holdco - Stock when Newco
is a separate Entity from Sears Holdings?
May I ask where you read the above? Thanks."
my first thought would be that newco, which IS a separate entity from shc, will be issuing shares in its own company (i.e. newco) and some of those shares will be issued to esl (probably as newco's main principal investor/owner) in consideration for what esl contributed to newco as part of the purchase price paid to shc. that contribution (esl's secured debt from shc) is what is being contributed and the compensation for that debt will be shares of newco.
so, where did this scheme get hatched? look at page 85 of 157 of docket 2339. that diagram represents a bc section 363 exchange which was put forth as one way to preserve some/all of the nol's for newco. while that specific diagram was based on an irs private letter ruling to some other company, deloitte or weil used it as an example of what could be done in the particular case of transform holdco providing consideration to shc (in this case, partially in the form of a credit bid).
don't try downloading docket 2344 on your phone or it will blow up or lock up. it is quite long.
look on page 237 of 598 of docket 2344 and starting at line 20 which continues onto page 238 of 598 from lines 1-3 there is a specific provision in esl's revised bid (which is the bid accepted by shc as a qualified bid) which provides for the issuance of newco stock in exchange for the credit bid.
shc's consideration is $1.3 billion in debt to esl which they do not have to repay and esl's consideration is stock in newco.
IF, IF, IF esl's bid is approved by the court, it is my expectation that transform holdco will get a "real" name, a filing/prospectus will be submitted to the sec authorizing shares in the newly named company, and some of those shares will be issued to esl in consideration of the $1.3 billion debt cancellation.
it is my expectation that shldq shares will be cancelled and IF, IF, IF those shares do not become worthless, we will see in a plan of reorganization a provision for issuance of newco (whatever the renamed company is) shares to commons (in some fashion) probably to some other secured creditors, and then to unsecured creditors as well.
in order to determine what number of shares might go to the creditors, it seems that knowing the surplus from the shc liquidation is paramount, unless creditors waiting to be paid agree to take newco shares in exchange for cancelling their debt. at that point, not sure, but if there is still any surplus remaining, that might go to transform holdco (real named company)
those are my thoughts on how this might play out but the exchange of debt for shares was part of esl's revised bid as noted above.
Short $ Tiny compared to Sears sorry guys you really don't compare
110% right on
Once $1 reach
I think you are missing that in order for Sears Holdings
to emerge from bankruptcy and merge with Holdco
it cannot liquidate ALL of its Assets and must be a
viable business when it emerges in order to preserve
the NOLs.
And Holdco will not merge with Sears while it is in
bankruptcy because of the outstanding Debt -
which needs to be converted first into new Sears stock
before any merger consideration.
buxcapital, why dont you explain now what will happen??
Per Docket # 2339 - the NOLs were $ 5 B
as of Feb 3, 2018.
Another $ 1.9 B in Losses - from Feb 3 to Nov 3 2018 -
was incurred according to this quote from a
news article:
“ Just one day prior, Sears reported racking up
nearly $1.9 billion in losses during the nine months
ending Nov. 3. More than half of those losses
came during the final three months, during which
Sears filed for bankruptcy protection, according
to a quarterly financial report filed Thursday. “
This could mean that as of Nov 3, 2018 the
NOLs were $ 6.9 B.
How can ESL’s Debt cancellation be converted
into NEWCO - Transform Holdco - Stock when Newco
is a separate Entity from Sears Holdings?
May I ask where you read the above? Thanks.
This week it will my friend and I’ll be here to explain whats going on every step of the way!
Commercials is all I watch it for really and they have been pretty weak the last couple of yrs
you're welcome, cf
done for the weekend. will just wait and see what breaks. not particularly a football fan but for those who are, enjoy the superbowl. as usual, looking forward to the commercials.
Shld(q) will never see under 0.50 again...
Thank you for all the work reviewing doc's and providing us a summary JTFM!
It's looking more favorable for investors in SHLDQ commons based on agreements made 1/19. We'll see how this week unfolds.
Enjoy the rest of your weekend and thanks for the effort.
CF
One Dollar by the end of the week then the big board traders take over the stock and systematically take the price up 20-30% each day
Not tomorrow .by end of week.read news. tomorrow is the start.
Enough said. The employees should be the first to know that their jobs are safe. Hope your kid has fun with the stuff that you bought him
Judgement day tmrw
SHORTS ARE SWEATING SOO MUCH YOU CAN CREATE A SWIMMING POOL. ...LOL..JMO
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.
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.
They could always get back in
Going to get interesting around here, maybe with previous asset sale when they were in trouble the shareholders going back will sue
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.
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 :)
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
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.
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.
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/
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.
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.
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?
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..
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.
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
An Interesting week coming up, place your bets!
PPS ^ Short Loans Cancelled Short assets poof gone forever
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
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!
Send her on Twitter to stop bashing Sears I did many others as well
Short sellers are betting on the huge odds that Judge will not approve the sale when approved this week short sellers will pay hefty :)
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!
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 !
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