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because he owns more of it than anybody else
if he "goes public" my take is that means an ipo. going public after running transform holdco (or whatever name it becomes) for a while and doing those things that public investors wouldn't endorse.
eddie made a commitment in the apa to keep those employees employed through 2020. however, that might also be some word trickery. usually, retail operations have a fiscal year ending 1/31 which i think was also the end of the fiscal year for sears holdings.
so, if transform holdco were to have a fiscal year ending january 31, 2020, that would mean eddie's commitment to those employees might be for not much longer than 1 year from now.
if his plan is to significantly downsize stores, how does anyone think he will continue to employ 45,000? the current base of employees associated with the stores will gradually be whittled down as he downsizes his retail footprint. that can't/won't be done in a year. but if you were to believe his plan, then downsizing with a resultant reduction in number of people employed seems to be the writing on the wall.
how soon he needs money to continue rolling out his plan will be the factor determining when he goes public.
if eddie gets an irs ruling which allows him to utilize the nols the way the sale is currently structured then you need to realize that eddie owns 100% of transform holdco. transform holdco owns 100% of everything which sears holdings sold to transform holdco.
if eddie gets the irs ruling as the sale now stands, all of the shldq stock is still with old sears which has nothing to do with lampert.
one could actually say that lampert would be screwing himself if he took in all of the shldq shares in some type of exchange because he would no longer own 100% of transform holdco because his ownership percentage would be diluted to the extent of the shares he didn't already own of shldq.
so, that's why i have said that unless eddie is required to take in the existing shareholders of shc, i don't believe he will just to be a good guy. and if he doesn't have to take in the existing shareholders as part of transform holdco, then any value for shldq shareholders will have to be found in what's left of shc (i.e. a shell with little left but liabilities). and, what little shc might have left will be quickly eaten through if shc were to be dismissed from bankruptcy because it would now be defending itself in multiple state and probably federal courts from all of the creditors who are owned money.
being dismissed from bankruptcy doesn't mean things are over for old sears. being DISCHARGED is different that being dismissed.
wsj, thursday february 14, 2019. business section. long article starting on top of page B1 of the business section and continuing onto page B6.
next to last paragraph of the article quoted lampert:
"being private has certain advantages of being able to do things that public investors wouldn't endorse"
the article also noted that "Mr. Lampert is buying a number of stores that have closed. He said those locations would probably not reopen and would likely be sold.
On Sep. 1, 2016, Sears Holdings Corporation, Sears Roebuck Acceptance Corp. (“SRAC”) and Kmart Corporation (together with SRAC, the “Borrowers”) entered into a Second Lien Credit Agreement (the “Credit Agreement”) with the Lenders (as defined below) and JPP, LLC, as administrative agent and collateral administrator (the “Agent”), pursuant to which the Borrowers borrowed $300 million of term loans (the “Term Loan”). Mr. Edward S. Lampert, the Company’s Chief Executive Officer and Chairman, is the sole stockholder, chief executive officer and director of ESL Investments, Inc., which controls JPP, LLC and JPP II, LLC, the lenders under the Credit Agreement (the “Lenders”). The Company expects to use the proceeds of the Term Loan for general corporate purposes.
Sears sold Craftsman to Stanley for $900 million because it had to raise cash. In a testament to Chairman and CEO Eddie Lampert's financial prowess, he structured the deal to allow Sears to also retain rights to manufacture and sell Craftsman tools in its stores, too, for a period of 15 years, plus receive annual payments of 2.5% to 3.5% on any sales Stanley makes for a period of three years.
So on one hand, Sears will still be able to realize some benefit from Stanley's decision to expand availability to Lowe's, but on the other, Sears could have been reaping all the benefits for itself.
https://www.sec.gov/Archives/edgar/data/1310067/000119312517075459/d330786d8k.htm
don't believe your comment:
"Whirlpool owns Kenmore Brand"
is correct.
Dishwashers: Even though Whirlpool appliances are no longer sold at Sears stores, nearly all current Kenmore dishwashers are made by Whirlpool Corp., a partnership that's lasted for decades. ... Ovens, Cooktops, and Ranges: Nearly all Kenmore cooking products are now made by Frigidaire.Oct 24, 2017
"Craftsman is owned by Stanley Black and Decker. With that PR it certainly injects more speculation Here"
i believe when sears sold craftsman to stanley black and decker that sears retained the right to sell craftsman tools which possibly were manufactured by any network it had in place prior to the sale.
so, this announcement might not actually be injecting any speculation.
51. Distribution and Application of Sale Proceeds.
(a) At the Closing, the Buyer shall pay to the Sellers (in accordance with the terms of the Asset Purchase Agreement), the balance of the purchase price remaining due and owing under the Asset Purchase Agreement. The proceeds of the Sale Transaction shall be applied
as provided in the Final Order (I) Authorizing the Debtors to (A) Obtain Post-Petition Financing, (B) Grant Senior Secured Priming Liens and Superpriority Administrative Expense Claims, and (C) Utilize Cash Collateral; (II) Granting Adequate Protection to the Prepetition Secured Parties; (III) Modifying the Automatic Stay; and (IV) Granting Related Relief (Docket No. 955) (“Final DIP Order”), including to repay at the Closing the DIP ABL Secured Obligations (as defined in the Final DIP Order) in full in cash from the sale of those Acquired Assets upon which the DIP 18-23538-rdd ABL Credit Parties have a first lien, including all costs and expenses of the DIP ABL Credit Parties set forth in the applicable pay off letter, without the need for any professional for the DIP ABL Credit Parties to deliver or serve any invoices to any other party (including those parties identified in paragraph 19(f) of the Final DIP Order). Notwithstanding the foregoing the Securities
Consideration shall be distributed as provided in Schedule 9.2 of the Asset Purchase Agreement. The methodology for allocation of proceeds shall be as set forth in the Asset Purchase Agreement.
If you successfully complete your case and obtain a discharge, you are no longer on the hook for any debts discharged in your bankruptcy. However, if your case gets dismissed, you lose the protection of the automatic stay and your creditors are free to come after you to collect their debts.
as the debtor in this case, it is "old sears'" responsibility to file the por. since filing a por on its face means there is a plan to reorganize, that plan would have to be presented for a vote ( i believe to both creditors and shareholders). any party made whole is by defaut assumed to have ratified the por and would not vote.
if no por is presented by shc by the deadline and shc didn't have some compelling reason for failing to file (which one might think would have been addressed in some filing prior to a deadline), then it's my understanding the judge could dismiss the case which would throw what's left of shc into the state and possibly federal courts to defend itself without the protection of bankruptcy and the stays against prosecution which comes from being in bankruptcy.
if shc were to fail to file a por, an interested party (one of the creditors) could petition for the case to be converted to a chapt 7 liquidation with a trustee appointed to take over matters. something that shc doesn't have to worry about now as a debtor in possession. while shc needs court approval to do what it is currently doing, there isn't a trustee taking matters out of the hands of shc.
if a trustee were to become involved, that costs money and it would come off the top before anything went to creditors. for that reason, now that shc is where it is, creditors might be reluctant to push for a resolution which would involve a trustee and the expenses associated with that.
my guess would be if the judge takes matters into his own hands there would be no effective date, as in some date 90 days removed from his decision. i would think it would be immediately which is the reason why i think shc asked for that extension.
there's also the omnibus hearing around march 21 (i think that's the date) and there will be an expected update on the por at that time.
certainly seems the judge will be asking about it even if not offered.
north,
unfortunately this is from lampert's 2016 letter. you call that dd?
Chairman's Letter
February 25, 2016
To Our Shareholders, Associates and Members:
https://searsholdings.com/invest/chairmans-letters/february-2016
look at the last paragraph above eddie's signature.
no, i didn't say the outstanding shares had increased to 150 million.
what i said was that if you believed the 73% lampert ownership thing (which i specifically said i didn't believe because that was the difference between direct and beneficial ownership) then the form 13d/a said lampert had 156 million shares which is roughly 50 more than the amount outstanding.
that same form,i believe, explicitly states there are 109 million shares outstanding.
my point was to show how ridiculous these comments were.
the warrants can be exercised at something over $40/share as i remember. if you think the stock will be over $40/share by this coming december then you should buy.
if you are buying to play off the $0.11 price, as i also recall, the daily trading on these warrants is quite thin. you might not be able to get out of your position to cash in on a $.05 movement even if you wanted.
know there was a seeking alpha post (at least i think that was it) which talked about this. i don't deal in those kinds of trades those are my thoughts.
___________________________________________________
regarding lions post as to why lampert might direct shc to convert some of sears' subs into llc, it could be becasue that is the structure lampert might need in order to utilize the nols within transform holdco.
i believe this might be addressed in 9.2 of the apa and it seems to me that these directions were more from the standpoint of doing it for lampert within transform holdco as opposed to shc doing it for their own benefit in case lampert rejects the nols and they stay with shc.
could be wrong, but i don't view doing that as setting up a situation in which lampert would then reverse merge with old sears. just don't see it happening that way.
junky,
it's absolutely not a merger. read judge drain's order. it specifically states it is not a merger, it is not a continuation of old sears, it is an asset sale to transform holdco.
although you might have gotten a letter which said:
Ah geez, I just remembered we got a letter on Feb 15th from Sears CFO (Rob Riecker) specifically stating the sale was closed. So it is for sure closed. The wording is
"We are pleased to confirm the closing of the sale of substantially all of Sears Holdings' assets, including 425 "Go Forward Stores", to Transform Holdco LLC, an affiliate of ESL Investments, Inc. for a total consideration of approximately $5.2 billion"
reicker misspoke. the sale was approved by judge drain, it has yet to close.
regarding payment from sears, i commented recently on this board that i had brought a small claims action against sears protection company for breaching its service agreement. the judge found in my favor and last week i received a claim from "sears holding corporation as debtor in possession" drawn on bank of america in full satisfaction of this claim, plus my court costs.
mehdi,
i did this a number of weeks ago as well.
while they did discuss establishing an equity committee, don't believe this ever happened. now that the apa and lampert's deal has been approved, there's even less for them to fight over, absent the tax assets, and i think even that is arguable.
re: the houlihan comments, i had posted comments from old sears advisors that they viewed keeping the tax assets and trying to reorganize around them as speculative, at best, and more value would be realized by including them in lampert's purchase offer.
as to your speculation this might still be in play, according to the documents filed, all of the stores which old sears controls right now, the documents indicate they are all undergoing gobs. some of those will be turned over to lampert as part of his purchase deal and i believe the others will be monetized to pay off administrative claims and creditors.
i think the lands end analysis as well as the seritage transactions were being examined in house to assess any liability they might have for approving those deals with lampert.
a recent filing indicates the unsecured creditor's committee is retaining a conflicts counsel. i believe this is all in preparation to litigate against lampert. while i have no doubt there will be a number of actions brought against lampert, unless lampert were to just throw more money at them to make it go away, seems to me that lampert could countersue since all of the transactions were approved by advisors and directors of the company who were not insiders.
this type of things is why companies have directors and officers liability insurance. i would think, unless truly illegal activity took place around these various asset stripping transactions, that lampert would have some type of action against the insurance company if they were to deny representing and covering him on these matters.
at any rate, expect lampert to be involved in litigation.
st,
will address your last question first in which you ask:
"what about the 200 shares converted to 1000 it is in the court filing is that also in your opinion we not getting 5 dollars"
the way i look at this issue is to boil it down to a put/call situation.
the securities which have this conversion option possibly needed a sweetener at the time they were issued. that sweetener was the "right" but not the "obligation" to exchange $1000 of the debt instrument for 200 shares of stock. if, as the holder of that debt instrument you decide to exercise that conversion option, the issuer of the debt is obligated to make that exchange. remember, if the debt is converted, the holder of that debt is NOT getting $5, the holder is getting 200 shares of stock presumably worth $5.00.
now, imagine that you are not eddie, but just some investor who happened to own some of that debt. let's say you woke up some morning and saw the stock was trading at $1.00, would you convert your debt to stock? can't imagine why since you would be receiving $200 worth of stock and giving up $1000 worth of debt. conversely, if you woke up some morning and saw the stock was trading at $10, you would immediately call your broker, make the exchange for 200 shares of stock for which you gave up $1000 of debt, told the broker to immediately sell those 200 shares and receive $2000 for what you had just exchanged for $1000.
now, let's say you are eddie. all things being equal, he would look at this situation as described above. however, if for some reason he needed shares, might he make this exchange? maybe, but for what reason?
THIS IS TOTAL SPECULATION AND IT NEEDS TO BE TAKEN FOR THAT. IT'S AN EXAMPLE WHICH I DON'T HAPPEN TO BELIEVE.
what if the recent SEC filings which were subject to a confidentiality order had something to do with these securities? if something were to be going on which required eddie to obtain some more shares but not have anybody know about it, maybe he could do it this way and not report it.
also need to remember that eddie purchased some similar debt which was recently disclosed at a discount to par. what does that mean? the market prices in some risk this debt will not be paid off and therefore in order for it to be sold it needs to be marked down. eddie purchased some of this debt at around a 20% discount. in other words, he purchased debt with a face value of $1000 for $800. this debt had the same conversion privilege. so now, if eddie decided to convert this debt, he would be gotten shares for which he now only paid $4.00.
so now, according to the "logic" on the board, you should be receiving a $4.00/share buyout. Don't see that happening either.
let's say i gave you a note for which you paid me $20,000 with a guarantee to be repaid with interest in 1 year and that note gave you the right to buy ONE bitcoin for $12,000 if you converted it within the next 60 days, would you do it? probably not since bitcoin is trading for less than $4,000 now. it also doesn't mean than everybody holding bitcoin is going to be able to sell them for $12k because you have a note giving you that right (but not obligation).
_________________________________________________________________
imagine you have a large basket on one side of a table holding trinkets representing all of the things which sears holdings corporation owns, trinkets representing all of sears tax assets, trinkets representing a bunch of lawyers and consultants screaming to be paid and trinkets representing all of the outstanding obligations sears holdings has to pay. now imagine a basket on the other side of the table with a check made out to sears holdings corporation in the amount of $5.2 billion dollars.
there is an arrow pointing from the sears basket toward the basket with the check as well as an arrow pointing from the check basket back towards sears. underneath those two arrows pointing in opposite directions is a thick sheaf of papers we will call a purchase agreement.
the people controlling both baskets agree to be bound by that piece of paper in the middle, sign on the dotted line and the check gets slid across the table to be placed in the trinket basket. the person who controlled the check was able to pick and choose which trinkets were being purchased (subject to mutual agreement as set out in the purchase agreement) and when all is said and done, going into the basket which previously held the check were trinkets representing substantially all of the things which sears holdings corporation owns as well as the trinkets representing the tax assets.
that leaves trinkets representing lawyers and consultants screaming to be paid as well as the trinkets representing the outstanding obligations sears owed which by this time were all screaming to be paid as well.
where we are now is in no-man's land in that area between the baskets. one side hasn't actually received the check yet and the other side has not received the chosen trinkets. what to do? each side has to keep up their end of the bargain until the closing occurs. this is why you saw an announcement from old sears yesterday about alexis, kenmore and amazon. old sears not only has to keep the lights on until the closing occurs but it also has to maintain the assets which it sold. back to the house purchase scenario, even though you may have bought a house, if the deal has not closed, the seller is obligated to maintain it in good shape until the close or be liable for damages.
each side is bound by the agreement until deal is actually done. in this case, even though the tax asset trinkets are headed toward the ckeck basket, there is a possibility they might be sent back. why would they be sent back? because the basket which wanted them and which actually paid money to purchase them found out they could not be used and was able to send them back to the original basket.
so now, what value do they have in the basket from which they originally came? they are place back into that basket with no more goody trinkets and all they have for company are a bunch of trinkets representing lawyers and consultants screaming to be paid as well as obligation trinkets also screaming to be paid.
also remember, i posted in the last couple of days citing the source, that consultants for sears holdings corporation looked at the tax asset situation before all the goody trinket were sold and decided their ability to reorganize and utilize those tax asset trinkets was speculative and marginal at best and more money would be realized by selling them to the check basket than keeping them
now that they might get them back, how is it that they could be utilized now that all of the goodies around which they might have been able to reorganize are gone? i don't see much value in these assets being returned to sears holdings corporation but linda felt that was the way shldq shareholders would best benefit.
those are differences of opinion and each holder of shldq will have to make that decision on an individual basis.
btw, if one looks closely at the basket which used to have all of the trinkets but now has few, with which basket do you think amazon would want to partner?
_______________________________________________________________
now for me, i view any value for shldq (outside of flipping, and that has produced real money for some) coming out of lampert's basket and that is only if he is able to get a tax opinion and ruling permitting transform holdco to utilize them.
seems one of the conditions on being able to utilize them centers around "shift in ownership" which i think is covered and the "continuity of proprietary interest" about which i am not so sure.
my problem with the latter requirement is the language around the 50% ownership issue. since i'm always looking for loopholes in contracts, my concern is can this requirement be satisfied based only on lampert's ownership (assuming he can pick up another 1/2 % so that he goes from 49.5% to the magic 50%. if so, there is no need to bring along the minority shareholders.
in response to the question "why would lampert wipe out his own common shares?" my answer is since he already own 100% of transform holdco why would he want to take in the shldq common shareholder (of which he controls the most shares) which would serve to dilute the 100% ownership status he currently enjoys? if he doesn't have to then i don't think he will. that's my personal decision which most don't share.
mehdi posted a couple of links regarding 363 sales and the congressional report dealing with continuity issues. i posted my analysis of those things (post 28487) and that gave me some pause.
as of now, i have sold 3/4 of my position. still holding 10,000 shares which i plan to keep. if i do anything while this plays out it would be involved in trading shares based on $ pocketed. am completely free and clear and sitting on house money. unfortunately, had not done my analysis last week and didn't catch the highs. had posted earlier my basis was $0.232 so not hurt but not where i had hoped to be.
the key for me is whether or not lampert keeps the nols. if not, i will be totally out, if so, then i will have to look again at the likelihood of lampert bringing along all shldq shareholders to join in his party.
i may be totally wrong but i just don't see any "backward" merger with old sears for the reasons i have previously articulated.
so, bottom line, still long shldq and still looking for clarification.
we have months before any por is filed and/or approved. the "Q" is not coming off any time soon in my opinion unless old sears were to be declared administratively insolvent and if the judge were to dismiss the bankruptcy case, while others seem to think this is a good thing, i believe it would be a real shit storm for what's left of old sears, including shldq (assuming it is not cancelled)
i will be maxed out after this post so am done for the day.
shaz, you asked:
"Yes but at what price would he buy the rest of the shares out?"
if you mean his conversion price, then for a lot of the debt he holds, he could obtain 200 shares of stock for each $1000 of face value of debt he surrendered. that's about 5 times the current price. for the warrants, i believe the strike price was well above $40/share.
if you are talking about getting his % of outstanding shares above the 50% mark then why wouldn't he just buy shldq like we are?
as previously discussed, even though eddie resigned from the board and no longer holds any position within sears, he is still considered an insider because he owns more than 10% of the shares.
since any purchase/conversion eddie might make to actually take ownership of shares would have to be reported, if you are just talking about getting above the 50% mark, why not go the cheapest route?
makes no sense to convert debt which is either secured in some fashion or may even have a superprioroty to get shares which would be priced well above the market.
i actually understand that those are entities which eddie either owns or has a substantial interest in. others don't. i understand that eddie and his entities don't have direct ownership of 70+% of the outstanding shares, but others don't. i also understand the difference between outright ownership and beneficial ownership. others don't
it's not understanding these differences which lead to comments like eddie made his purchase using his 73% of stock. or, the $1.2 billion eddie put into the purchase price was common stock.
is't not a matter for argument, it's a matter of fact and too many are ignoring the facts, not doing basic dd and making ridiculous statments showing they have no idea about that which they speak.
i understand there are differences of opinion about where the tax attributes might land (old sears) or remain with lampert. it is however, a fact that those tax assets were included in lampert's purchase price and will remain with lampert if he receives a favorable tax opinion and/or ruling.
it may be a matter of opinion whether or not lampert will be successful in obtaining a favorable tax opinion and irs ruling. however, it's not a matter of opinion that lampert's intent was to structure the transactions described in the asset purchase agreement in a manner which might be considered as a tax reorganization, subject to obtaining those approvals.
it may be a matter of opinion that lampert will do some type of merger or stock purchase of old sears. however, it's not a matter of opinion that if he were to do that then he would just be taking back all of those liabilities he successfully was able to avoid by having the purchase structured under a 363(f) sale.
nobody seems to want to understand what a dismissal from bankruptcy means with respect to the debtors. based on posts, it seems that some think this is a "get out of jail free" card for sears and the stock will go to the moon.
some posters believe that old sears is going to strike some kind of deal with amazon to place whole foods stores in vacant sears property. however, all of the property which old sears may still have (other than those which will be turned over to lampert after they are cleared out) are currently being monetized to pay off creditors and administrative claims. old sears will have nothing left to partner with amazon.
as many people have posted, there is serious money to be made flipping this stock. others are taking the position there will be a home run by just buying and holding on waiting for the stock swap which is "certain" to come. at this point, the only ones certain to make money are those who have bought and sold at a profit.
if you are of the camp and believe that lampert is going to do some type of merger and stock deal, then why the hell wouldn't he have done that in the first place? a 363 sale can either be a stock sale or an asset sale. if he wanted the stock and the tax assets, he could have done that already and he didn't. why?
in bankruptcy, it is the debtor's responsibility to present the plan of reorganization. the debtors are shc and its subsidiaries, all of whom are listed as debtors on footnote 1 of each of the filings.
eddie has nothing to do with the bankrupt entity. he resigned from the board. he doesn't write the por.
mm,
the first thing you need to ask yourself is if there are only 109 million shares outstanding how is it that eddie can own 156 million of those shares?
seems like a real problem in the "math" everyone is throwing around about how much eddie owns.
eddie and his entities actually own 49.5% of the shares outstanding.
IF eddie and his entities were to exercise warrants and derivative securities, they would own somewhat over 156 million shares.
IF eddie and his entities were to exercise those warrants and derivative securities, that means that the 109 million outstanding shares would be increased by over 50 million shares.
there is a big difference between what eddie and his entities own outright (49.5% of outstanding shares) and what eddie and his entities beneficially own. since eddie and his entities have "rights" to additional shares, it is deemed they have beneficial ownership of those shares, not actual "in hand" ownership.
read the footnotes and think about this:
ESL PARTNERS OWNS 73.4%
JPP II, LLC OWNS 37.2 %
RBS PARTNERS, L.P. OWNS 73.5%
the above three entities, listed on the link you posted to me, collectively own 184.1% of the stock.
exactly how is it possible for them to own MORE THAN 100%?
you really need to revisit this topic.
as they said in the x-files, "the truth is out there"
it's staring you in the face. this is a classic example of looking but not seeing.
eddie didn't put in $1.2 billion in common stock.
eddie was able to credit bid $1.2 billion of debt obligations shc was required to repay him so he forgave that debt as part of his $5.2 billion purchase price.
the sale transaction has not closed yet. therefore "old sears" i.e. NOT LAMPERT"S COMPANY, TRANSFORM HOLDCO, is continuing to operate the properties, which would include things such as this news release.
the following section is from the asset purchase agreement setting forth some of what "old sears" i.e., the company associated with shldq stock, needs to do. while this section addresses the obligations of "old sears" after the closing takes place, as of now since the closing has not taken place and lampert does not yet own everything on which he bid and which the judge approved in his order, it should not be viewed as anything out of the normal for "old sears" to be continuing to do these types of things.
any of you ever purchased a house? fine, you signed a contract, but until the bank funds the purchase, or you pay cash and actually CLOSE the purchase, the property is not yet yours to do with as you please. that's where lampert is at this point. HE HASN'T CLOSED
_____________________________________________________________________
during the period between the Closing Date and its (meaning "old sears")
dissolution, shall limit its activities to those which are merely for the purpose of liquidating its assets (which may include maintaining a going operation for the preservation of value, pending distribution or sale), winding up its affairs, resolving and paying its debts, and distributing any remaining assets (which may include a distribution to a non-corporate liquidating vehicle).
____________________________________________________________________
NOTICE, after the closing, while lampert is going on his merry way running the assets he purchased in the way he want to, the company from whom he purchased those assets, namely "old sears" has to do those things set forth immediately above. NOTICE also, it is planned that "old sears" will be totally liquidated within 3 years of closing the deal with lampert!!!
TSP,
don't think that actually was eddie's reference.
this from the apa:
Schedule 7.1
Equity Interests in Buyer
1. Transform Holdco LLC is a Delaware limited liability company
2. The sole owner of Transform Holdco LLC is ESL Investments, Inc., a Delaware Corporation
3. The sole owner of ESL Investments, Inc. is Edward S. Lampert
SO, eddie owns it all. it's private. that's what he was talking about.
look on any one of the filings (dockets) in this case and footnote 1 on page 1 lists each of the subsidiaries under sears holdings corporation who are included as debtors in this bankruptcy:
MEHDI, INNOVEL IS ON THIS LIST
___________________________________________________________
The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification
number, are as follows: Sears Holdings Corporation (0798); Kmart Holding Corporation (3116); Kmart
Operations LLC (6546); Sears Operations LLC (4331); Sears, Roebuck and Co. (0680); ServiceLive Inc. (6774);
SHC Licensed Business LLC (3718); A&E Factory Service, LLC (6695); A&E Home Delivery, LLC (0205);
A&E Lawn & Garden, LLC (5028); A&E Signature Service, LLC (0204); FBA Holdings Inc. (6537); Innovel
Solutions, Inc. (7180); Kmart Corporation (9500); MaxServ, Inc. (7626); Private Brands, Ltd. (4022); Sears
Development Co. (6028); Sears Holdings Management Corporation (2148); Sears Home & Business Franchises,
Inc. (6742); Sears Home Improvement Products, Inc. (8591); Sears Insurance Services, L.L.C. (7182); Sears
Procurement Services, Inc. (2859); Sears Protection Company (1250); Sears Protection Company (PR) Inc.
(4861); Sears Roebuck Acceptance Corp. (0535); Sears, Roebuck de Puerto Rico, Inc. (3626); SYW Relay LLC
(1870); Wally Labs LLC (None); SHC Promotions LLC (9626); Big Beaver of Florida Development, LLC
(None); California Builder Appliances, Inc. (6327); Florida Builder Appliances, Inc. (9133); KBL Holding Inc.
(1295); KLC, Inc. (0839); Kmart of Michigan, Inc. (1696); Kmart of Washington LLC (8898); Kmart Stores of
Illinois LLC (8897); Kmart Stores of Texas LLC (8915); MyGofer LLC (5531); Sears Brands Business Unit
Corporation (4658); Sears Holdings Publishing Company, LLC. (5554); Sears Protection Company (Florida),
L.L.C. (4239); SHC Desert Springs, LLC (None); SOE, Inc. (9616); StarWest, LLC (5379); STI Merchandising,
Inc. (0188); Troy Coolidge No. 13, LLC (None); BlueLight.com, Inc. (7034); Sears Brands, L.L.C. (4664); Sears
Buying Services, Inc. (6533); Kmart.com LLC (9022); Sears Brands Management Corporation (5365); and SRe
Holding Corporation (4816). The location of the Debtors’ corporate headquarters is 3333 Beverly Road, Hoffman
Estates, Illinois 60179.
lg,
whatever partnership amazon had with shldq was purchased by lampert and has nothing more to do with shldq.
the following two contracts with entities of shc (which shldq stockholders had some type of prior vested interest) were assigned to lampert under the purchase agreement.
30. Professional Seller Program, dated as of June 29, 2017, by and among Sears Protection Company, Amazon Services LLC, and Amazon Payments, Inc.
31. Vendor Terms and Conditions, dated as of May 25, 2017, by and between Amazon Fulfillment
Services, Inc. and Sears Brands Management Corporation, as amended.
both sears protection company and sears brands management corporation are debtors in this bankruptcy and they signed over their interests to lampert.
lg,
THANKS FOR THE RESPONSE. THESE ARE MY THOUGHTS.
FIRST, IT'S OLD SEARS WHICH IS IN BANKRUPTCY, NOT LAMPERT.
1) Early dismissal from Bk means extra cash flow of 15 to 20 million a month
THE ONLY CASH FLOW I CAN SEE COMING TO OLD SEARS IS A RESULT OF THEIR VARIOUS GOING OUT OF BUSINESS SALES. ONCE THOSE SALES ARE COMPLETE, FOR THE STORES PURCHASED BY LAMPERT, THEY WILL BE TURNED OVER TO LAMPERT. FOR OLD SEARS OWNED STORES, IF THEY ARE SUBJECT TO SECURED LOANS THEY WILL EITHER BE SOLD AND THE PROCEEDS TURNED OVER TO THE SECURED CREDITORS OR POSSIBLY JUST BE TURNED OVER TO WHATEVER CREDITORS MAY HAVE HAD THAT SECURITY TO DO WITH AS THEY CAN TO MAXIMIZE THEIR RECOVERY. FOR ANY OF THE REMAINING STORES WHICH WERE NOT SECURED, ANY MONEY RECEIVED WILL BE USED TO SATISFY OTHER CREDITOR CLAIMS. I DON'T SEE ANY OF THIS BEING "HAPPY MONEY" FOR OLD SEARS.
EARLY DISMISSAL TO ME MEANS ALL OF THE "STAYS" PREVENTING CREDITORS FROM GOING AFTER OLD SEARS (THE ENTITY IN BK, NOT LAMPERT) WOULD BE LIFTED AND OLD SEARS WOULD BE SUED IN MULTIPLE STATE AND POSSIBLY FEDERAL COURTS AROUND THE COUNTRY. THEY NOT ONLY WOULD NOT HAVE THE "PROTECTION" AFFORDED THEM IN BK, THEY WOULD BE TORN APART.
AN EARLY DISMISSAL WOULD NOT GET THEM OUT OF THE OBLIGATIONS THEY HAVE TO CREDITORS, MUCH LESS THE ADMINISTRATIVE COSTS THEY HAVE AND ARE INCURRING.
2) No POR necessary due to already having a well thought-our plan-Time is mobey
YOU'RE CORRECT THAT NO POR WOULD BE NECESSARY, BUT THAT WOULD NOT BE A RESULT OF ANY VIABILITY ON THEIR PART. REMEMBER, THEY SOLD SUBSTANTIALLY ALL OF THEIR ASSETS TO LAMPERT. THE MONEY LAMPERT PAID TO ACQUIRE THOSE ASSETS IS EARMARKED. OLD SEARS CAN NOT JUST WALK OFF WITH IT AND GO ABOUT THEIR BUSINESS. THEIR BUSINESS WITH AN EARLY DISMISSAL WILL BE DEFENDING THEMSELVES AGAINST MULTIPLE LAWSUITS.
3) Also tells me a huge planned expansion on Amazon partnership that started in 2018
THE CURRENT AMAZON PARTNERSHIPS ARE PART OF THE "ASSETS" LAMPERT ACQUIRED. OLD SEARS HAS NOT MUCH OF ANYTHING LEFT, MUCH LESS AMAZON PARTNERSHIPS.
4) Common shares would sky-rocket from current levels because most expect the to be cancelled
THIS IS YET TO BE DETERMINED. WILL SHARES BE CANCELLED AND BECOME WORTHLESS OR WILL SOME TYPE OF VALUE BE REALIZED AS A RESULT OF SOMETHING LAMPERT MIGHT DO WITH TRANSFORM HOLDCO.
"NEW SEARS" IS SOMETHING WHICH WILL BE CREATED BY LAMPERT, IT IS NOT A PHOENIX RISING FROM THE ASHES OF "OLD SEARS" AS A RESULT OF "OLD SEARS" EFFECTING SOME TYPE OF REORGANIZATION AROUND WHATEVER IT IS THEY MAY HAVE LEFT AFTER DEALING WITH PAYING OFF CREDITORS.
IN OR OUT OF BANKRUPTCY, WHAT IS KNOWN AS OLD SEARS WILL ONLY BE AROUND TO DEAL WITH THE MESS WHICH IS LEFT OVER AFTER SELLING SUBSTANTIALLY ALL OF THEIR ASSETS TO LAMPERT
_____________________________________
AGAIN, NOT A LAWYER, BUT THAT IS WHAT I SEE ARE THE IMPLICATIONS OF AN EARLY DISMISSAL.
lg,
that's been posted a number of time before without further comment. my questions are:
what do you think are the implications of a "dismissal from bankruptcy"?
what do you think that means for shldq shareholders?
thanks
the confidentiality orders applied to
Exhibit 10.4 which is the superpriority dip agreement and
Exhibit 10.6 which is the superpriority junior lien secured dip credit agreement.
the're not some secret buyout agreement with amazon. i believe both of these agreements relate to lampert entities and the "superpriority" status attached to them means they are in front of the line to be paid ahead of what otherwise would be more senior creditors.
they may also have some benefits associated with structuring whatever deal is finalized (i'm sure all to eddie's benefit).
but, since they are confidential, we will once again, just have to wait and see.
so, when mrs. smith saw her late husband's oncologist at the funeral and she said to him, "i think our decision to keep him alive until the kids could all get home and say their goodbyes was the best possible outcome for all of us".
does that make you feel good?
i still believe the best possible outcome is what's going to be best for eddie and just hope it is also a really good outcome for the other shareholders.
remember, eddie also said as a private company he could do things that shareholders wouldn't approve. it will be only after these things he does which shareholders would not approve that he might consider going public.
will we still be around for that act of his play?
mehdi,
as i have commented on earlier, and which this article supports,
"the buyer takes the bad with the good in a debtor corporation stock purchase transaction. For example, the buyer will assume any liabilities of the debtor corporation, including any debtor corporation contingent liabilities."
so, in order for lampert to obtain the nols under a stock purchase scenario (the benefits of which would stretch over a number of years), he would have to take on the immediate creditor liabilities. i would think that after lampert has purchased substantially all of the go forward assets of shc (free of liens and other obligation) that clean slate he just got would be put at risk via an after the fact stock purchase deal.
am sure that's why his lawyers are being paid well over $1k/hour and we are out here picking shit with the chickens, but it seems like it would not be a good trade for him.
as to whether or not the tax attributes are with lampert yet, once the closing occurs it seems they will be. would you expect the closing to drag out until lampert gets a tax opinion and ruling? language below (depending on the por effective date) suggests lampert's decision about the nols could drag out until december 2019.
this language is from section 2.12 of the APA:
Buyer may, at any time on or before the earlier of (i) 15 days prior to the effective date of the Bankruptcy Plan and (ii) December 1, 2019, elect, by providing to Sellers written notice of its election, to treat one or more of the transactions (each, a “Designated Sale Transaction”) set forth in this Agreement as not qualifying as a Tax Reorganization, which election shall be effective unless Designated Tax Advisor cannot provide a Tax Opinion that such Designated Sale Transaction can be completed in a manner that would not be treated as a “reorganization” within the meaning ofsection 368 of the Code; provided, however, that in connection with any such Buyer election to treat all the transactions described in this Article II as Designated Sale Transactions
(resulting in no transfer of Sellers’ Tax attributes to Buyer), the Parties shall, if requested by Sellers in writing, identify a business of the Sellers that would become part of the Excluded Assets and
consider in good faith any other changes to the structure of the transaction that are reasonable and necessary as a commercial, bankruptcy law and other legal matter to achieve that result
judge drain's order to extend the exclusive period in which to file the por also provided there will be an omnibus hearing on march 21 at which time there should be some update on the por plans.
unless shc were to declare itself to be administratively insolvent between now and the hearing, the "q" will stay attached to shld at least until that time.
correcting my comment to chemist earlier, i had thought there was a double extension to file, the august date was the outside date for solicitation of bids.
while we will have to wait until the por is filed (hopefully june), if the nols and tax credits stay with lampert then sears will have three years from closing the lampert deal to liquidate. so, even if shldq goes away, old sears will "live on" while it winds down (analysis on post # 28636).
fate of shldq shareholders should be resolved once the por is filed which should be june if shc keeps to the schedule.
MEHDI,
how do you reconcile the article indicating if there is a 363 sale of assets that tax benefits remain with the debtor when in this case, the 363 buyer (lampert) seems to clearly be in control of the nols and tax credits.
the linked article doesn't mention 368(a)(1)(G) in conjunction with a 363 sale. this seems confusing based on what seem to be going on in the particular case between shc and lampert.
thoughts?
IS OLD SEARS (SHC) LIQUIDATING IF IT DOESN'T GET THE NOLS AND TAX CREDITS?
Under the assumption the nols and tax credits remain with lampert, the following section from page 33/1120 of Exhibit B (the asset purchase agreement) to docket 2507 which was judge drain’s order would apply.
Look at (iii) and (iv) below. This says debtor sears and those debtor subsidiaries of sears, all of whom are part of this bankruptcy, SHALL dissolve no later than the end of the third taxable year ending after the Closing Date. WTF? Pay attention to the last few words at the end of the section enclosed by the (…).
Wonder what is meant by a “non-corporate liquidating vehicle”? If the nols and tax credits stay with lampert, doesn’t this seem to say that any por filed by OLD SEARS is nothing more than a plan of liquidation?
“Distribution Requirement” shall mean the requirement that each Seller(i.e. all of the entities of OLD SEARS who are debtors in this bankruptcy filing)… (i) shall distribute the Securities Consideration received by it to Persons qualifying as holders of “securities” of such Seller for purposes of section 354 of the Code, (ii) shall distribute all of the cash received pursuant to Section 3.1(a), as well as all of its other property pursuant to the Bankruptcy Plan, (iii) shall dissolve no later than the end of the third taxable year ending after the Closing Date, and (iv) during the period between the Closing Date and its dissolution, shall limit its activities to those which are merely for the purpose of liquidating its assets (which may include maintaining a going operation for the preservation of value, pending distribution or sale), winding up its affairs, resolving and paying its debts, and distributing any remaining assets (which may include a distribution to a non-corporate liquidating vehicle).
there could be an effective date but it could be as fuzzy as within 90 days of filing a por.
unless shc were to be declared administratively insolvent and ordered to be liquidated or if judge drain were to dismiss sears bk case which would legally get them out of bankruptcy but subject them to claims in various state and possibly federal courts, i don't believe they will get out of bankruptcy until they have a por approved by the court at which time they would emerge.
i'm just skeptical they will ever file a por, especially if the tax assets remain with lampert.
revisiting an earlier post i quoted footnote 14 on page 32/112 of docket 2328. this was a quote from sears holdings lawyers/advisers and it stated:
"a reorganization around a smaller business division of the debtors was considered but the potential value attributable to an effort to preserve and utilize net operating losses and other tax attributes was recognized as speculative and significantly discounted when compared with the actual value presented by the Sale Transaction" (i.e. lampert's bid).
so, if sears, before selling virtually everything to lampert, didn't thinks a reorganization around something to preserve the nols and other tax attributes was viable, how could it possibly be viable now that anything of value around which it might have been able to reorganize has been sold to lampert?
regarding the stock questions, i don't think the "q" is coming off until shc's bankruptcy issues are resolved. if there's no por but there is a liquidation instead, then shldq will have no value within the old sears umbrella.
i see its only chance for any significant value is to be exchanged for lampert stock as part of the continuity of proprietary interest argument.
mehdi,
need to look at that. if the one i quoted is related to a merger agreement, then that is incorrect since this deal is not a merger.
my mind is a little fried after doing that. will look into it and post a reply back to you.
thanks
when sch filed for an extension i believe there was even a second extension anticipated on top of the first. at any rate, after filing a por then shc needs to submit it for voting and i believe the december 2019 date is the outside date for completing that.
even though shc filed for the extension to file a por, there is no guarantee one actually will be filed for any number of reason, including the possibility of administrative insolvency judge drain addressed in his order.
on the other hand, if lampert is unable to get a favorable tax opinion or irs private letter ruling and those nols revert back to shc, then there may well be a por filed.
i just view this as a wait and see game.
the sale which judge drain approved has not closed yet. that could still be weeks away. i haven't even seen the "cooperation" agreement between shc and lampert filed with the court yet. that agreement just sets forth the working agreements between seller and buyer. think of it kind of like a punch list of various things which still have to be satisfied.
for instance, part of lampert's purchase price included the shc hoffman estates headquarters. imagine a number of shc employees will stay there working under this cooperation agreement until everything is wound down and finalized.
my guess shldq will be trading for some time unless sears is unable to pay its administrative costs and is declared insolvent before they even have a chance to file a por.
still a lot of uncertainty around what's going to happen.
docket 2539 is unavailable. anyone know what that docket covered and did anyone download it before it disappeared?