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You do realise when you buy shares in any company on the secondary market who sold them to you and who got your money.. correct?
Hint - it's not the company.
You can do that but the SEC tells all investors point blank that investing in bankrupt companies takes on extreme risk and is highly discouraged.
Here is their official statement;
Note: Investors should be cautious when buying common stock of companies in Chapter 11 bankruptcy. It is extremely risky and is likely to lead to financial loss. Although a company may emerge from bankruptcy as a viable entity, generally, the creditors and the bondholders become the new owners of the shares. In most instances, the company's plan of reorganization will cancel the existing equity shares. This happens in bankruptcy cases because secured and unsecured creditors are paid from the company's assets before common stockholders. And in situations where shareholders do participate in the plan, their shares are usually subject to substantial dilution.
Source:
https://www.sec.gov/reportspubs/investor-publications/investorpubsbankrupthtm.html
Providing this plan gets confirmed - Yes.
A Disclosure Statement was filed along with a POR....this is rare but no two bankruptcy's are exactly alike and here we are.
Ok so the "Treatment" called for of class 9 (existing common equity) is as follows:
(a) Classification: Class 9 consists of all Existing Equity Interests.
(b) Treatment: Each Class 9 Interest will be canceled, released, and extinguished, and will be of no further force or effect. Each holder of an Interest will not receive any distribution on account of such Interest.
(c) Voting: Class 9 is Impaired. Holders of Class 9 Interests are conclusively deemed to have rejected the Plan under section 1126(g) of the Bankruptcy Code. Holders Class 9 Claims are not entitled to vote to accept or reject the Plan.
Source: Doc# - 230
https://cases.primeclerk.com/vnr/Home-DocketInfo
Marker:
Vanguard Natural Res (VNRRQ)
0.0221 down -0.0029 (-11.60%)
Volume: 20,000
However, before any POR sees the light of day the DIP will first put out a "Disclosure Statement" (DS).
What is that and why does it preceed a POR?
The DS must provide adequate information about the debtors financial affairs to allow their creditors to make an informed decision about whether to accept or reject the POR. In other words the creditors in a bankruptcy want (and have a legal right) to know every tiny detail about WHO the debtor owes, HOW much and WHEN they owe it. Then once a DS is filed the court will hold a hearing to approve or reject it. Typically you can expect multiple objections to the DS...which causes further delays :(
As I stated earlier VNR may have this case on a "fast track" ...but bankruptcies are never as fast as what most of us think that term to mean.
Marker:
Vanguard Natural Res (VNRRQ)
0.025 up 0.00705 (39.28%)
Volume: 106,592
VNR, the debtor in possession (DIP), is in a time window known as "exclusivity"..which means they have the legal exclusive right to put forth a POR before the court. Exclusivity last for 120 days post filing.
If and when that 120 days expires and there has been no POR put forth the DIP will typically motion that they need more time and the court will most likely grant them exclusivity for an additional 120 days.
This is only day 28.
The wheels of justice grind very slowly.
This VNR second filing for bk case is at minimum 2 months away from seeing a Plan of Reorganization..possibly much longer.
The unsecured creditors have not even been formed into an official unsecured creditor committee (OUCC) yet.
The debtor filed on April 1st, 2019...we're only into this 28 days. The debtor gave an optimistic target date of 3rd qtr 2019 to have this resolved..which I personally think is overly optimistic but they may be right.
The only people "surprised" by this chapter 22 case are a few shareholders..the creditors have seen this coming practically since the day the company emerged from ch 11 two years ago.
Marker:
Vanguard Natural Res (VNRRQ)
0.0224 up 0.00445 (24.79%)
Volume: 97,583
Marker:
Vanguard Natural Res (VNRRQ)
0.01925 down -0.00375 (-16.30%)
Volume: 100
Puppies r awesome, The article is dated: October 15, 2018...which was the same day Sears filed for bankruptcy. So? So here's the problem - its been 6 months since that article was put out..now ask yourself if one thing that article called for has actually happened.
The article lined out 4 bullet points of actions with dates.
It said:
· February 18, 2019 would be the deadline for filing Plan of Reorganization and a Disclosure Statement.
Was a POR filed? No. Not even close. Why not? No one stepped up with cash to "reorganize" the business. Eddie stepped up with cash to "buy" the business ..not reorganize it.
· March 25, 2019 would be the deadline for Court approval of Disclosure Statement.
Was a DS even submitted for the court to approve or deny? No. What ensued was an asset auction sale. Eddie won.
· April 29, 2019 deadline for Court confirmation of Plan.
With no DS how could the court confirm a POR? The answer is it can't.. because SHLDQ is not, and was never, being "restructured" or "reorganized". The assets they had were sold.. and the proceeds from that sale werent enough to cover the debts.
· May 14, 2019 deadline for effectiveness of Plan, exit from bankruptcy.
May 14th means nothing now except SHLDQ will still be in bankruptcy..dead broke..no assets..and out of options. Its difficult to get lawyers to go all in on your case when theres a good chance they might not get compensated! ":~(
....
Welcome to bankruptcy...this is SHLDQ's dim reality.
Eddie didn't put up more money to save Sears from liquidation the way some are thinking..it wasn't to "save" old Sears or any of its shareholders. Adding to his bid was the ONLY way to keep old Sears out of the jaws of a Chapter 7 liquidation. In order for Eddie to take all the good assets along with the NOL's and leave shldq in the junk heap he had to purchase the assets in a chapter 11 "liquidation" wherein he could control how it all went down and not some chapter 7 trustee.
This is about Eddie Lampert and nobody else.
SHLDQ is dead..there just hasn't been a funeral yet...but its coming.
ABL= Asset-based Loan
Last December when Sears rejected Eddies' first bid of $4.6B to purchase the assets, he had to cobble together more money asap or Sears would have been liquidated. To stave off that liquidation, Bank of America, Citigroup and Royal Bank of Canada provided $850M more in a DIP ABL.
The added financing increased Eddie's bid...it was approved by the court..he purchased every asset worth taking.. and the rest is history.
Ya..I realised that after I posted. He said "SEC" but I mistakenly took it to mean the latest bk filings.
Right church...wrong pew "
What's to explain..??..its just a formality.
Some lawyers who had not been admitted to practice in the jurisdiction this case is being adjudicated in are being recognized by the court and are now granted permission to participate in this particular case.
This VNR case hasn't really began in earnest yet...the lawyers are just now coming aboard ship.
Annual Report (10-k)
Date : 04/01/2019 @ 5:04PM
Source : Edgar (US Regulatory)
Stock : Blue Dolphin Energy Co. (QX) (BDCO)
Quote : 0.975 -0.155 (-13.72%) @ 3:59PM
[....]
We reported a net loss of $0.5 million, or a loss of $0.05 per share for the twelve months ended December 31, 2018 compared to a net loss of $22.3 million, or a loss of $2.09 per share, for the twelve months ended December 31, 2017. The twelve months ended December 31, 2017 included the net effect to our consolidated statement of operations of the Final Arbitration Award, which was an expense of $24.3 million, or $2.29 per share, in arbitration award and associated fees. Excluding the Final Arbitration Award, we would have reported net income for the twelve months ended December 31, 2017 of $2.0 million, or income of $0.19 per share, reflecting a decline of $2.5 million, or $0.24 per share, for 2018 compared to 2017 due to lower margins.
[....]
Source:
https://ih.advfn.com/stock-market/USOTC/blue-dolphin-energy-co-qx-BDCO/stock-news/79602070/annual-report-10-k
In general when crude oil prices rise, refinery net cash flows decline...and if crude oil prices fall, net cash flows rise.
Crude price doesn't affect refinery profits..except to the extent that higher crude prices might mean that less refined product is demanded.
Marker:
Blue Dolphin Energy (BDCO)
1.1 down -0.03 (-2.65%)
Volume: 350
Marker:
Delta Air Lines, Inc (DAL)
$55.64 up 3.46 (6.63%)
Volume: 9,157,209
How many were here when VNRR filed ch 11 bankruptcy just 2 short years ago??
Vanguard Natural Resources, Inc. Files for Chapter 11 Protection
PR NewswireApril 1, 2019, 5:00 AM MDT
HOUSTON, April 1, 2019 /PRNewswire/ -- Vanguard Natural Resources, Inc. (VNRR) (together with its wholly owned subsidiaries, collectively, "Vanguard" or the "Company") today announced that the Company has voluntarily filed petitions for relief under chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division (the "Court").
The Company has obtained a committed $130 million debtor-in-possession financing facility (the "DIP Facility"), which contemplates $65.0 million in new money, up to $20.0 million of which will become immediately available upon Bankruptcy Court approval and $65.0 million of which will roll up obligations in respect of revolving loans under the Company's existing credit agreement. The DIP Facility is underwritten by Citibank, N.A. Subject to Court approval, this DIP financing, combined with the Company's cash from operations, is expected to provide sufficient liquidity during the chapter 11 cases to support its continuing business operations and minimize disruption.
[....]
Source:
https://finance.yahoo.com/news/vanguard-natural-resources-inc-files-110000933.html
Marker:
Vanguard Natural Res (VNRR)
0.375 0.0 (0.00%)
Volume: 4,401
*Price for WTI currently $60.82 @ bbl and NatGas $2.69
*I should have put down the caveat I had in mind on that ch 22 prediction. It was based on EL doing exactly what he said he intends to do with the new Sears stores...which was to scale them down in size and focus on appliances, tools, exercise equipment, mattresses and its home services business.
The Sears in my area is one of the stores that survived and it has always been a much smaller single story version of most Sears stores which is what EL plans to do with the other stores. Ours had no clothes.. just appliances, tools, exercise equipment, mattresses and an auto center. You can go in there any day of the week..park on the front row cause there are no other cars, walk in and you might see 3 other people in the whole store...thats it! Now if that store made the keeper list I'd hate to see the ones that didnt. Kenmore appliances in our store are 30% higher priced than top brands at Lowes or Home Depot. If you like Craftsman tools, and many guys do, you can get them at Lowes. Was the demise of Sears purposely done to set this whole take-over thing in motion?? One could argue yes it certainly looks that way. In summation if EL's only goal is to compete with Lowes and Home Depot and nothing more then I say this is headed to ch 22 in 8 years or less.
It's unknown how much the few remaining assets (Transform didn't purchase) SHC has left are worth. I don't think anybody knows for certain. Liquidation proceeds are like predicting how much you'll make on an upcoming garage sale..estimates don't usually meet reality..discounts abound.
I think it will be mid to late April before the public knows how this gets sorted out. But I dont think there is any question whatever agreements are made (or handed down) will require more $$$ from EL. He had to know this path he's gone down had trouble written all over it well in advance and one would think he would have wanted a much cleaner break from SHC. He got everything he could have hoped for out of this. Its like getting the finest steak dinner with superb service and leaving without paying the whole bill..never mind a tip for the waiter or valet dude. This is why some in our society think capitalism is a 4 letter word. It isnt capitalism thats the problem...unbridled greed by a few is.
He needs to mop up the mess he's left and get on with it. As far as predictions go I say the "new" Sears will file chapter 22 bankruptcy sometime down the road.
Yes..I should have made that clearer. I wasn't lumping admin claims/fees in with the absolute priority pecking order. Admin fees are paid monthly and are shown on the MOR whereas all other claim holders (that recieve any recovery) won't be "paid" until the POR has been voted on, confirmed and blessed by the court... which can be year(s) after the filing.
Chapter 11 Bankruptcy is expensive business for everyone involved...and the longer it takes the more it costs.
Yes. Good article. It lays out why EL has no problem sacrificing his SHLDQ stake. He used a boatload of SHLD stock (much of it he paid nothing for) in order to get at $2billion in tax incentives which have the potential to return far more to him than his SHLDQ stock ever did. Some have argued this is what Eddie planned to do to Sears at least a decade ago...and I completely agree. It was never about Sears legacy of selling clothes, refrigerators and tools...it was about control, real estate and tax advantages.
Insider Equity Holdings is notoriously a stumbling block for people who get in a situation like this. Especially when that large equity holder also happens to be a large creditor. They cannot envision why insiders will always choose to take full advantage of their creditor status ..and abandon their equity stake. They cannot get their mind around why they would do that. For starters there are legal reasons you see this happen but the most important reason is pure economic.
Take Eddie as an example. Eddie was the CEO and Chairman of the BOD (he no longer is the ceo but he retains his chairman position on the bod..but thats another story). As a CEO Eddie didn't go out and actually purchase every share he holds. An enormous amount of his equity holdings was "awarded" as part of his "executive compensation" meaning Eddie didnt have actual ca$h coming out of his pocket to attain a large portion of his equity holdings. I'm not saying Eddie didnt "value" his equity..nay nay..he clearly did because it was his majority equity position that gave him the votes to enact what Eddie the CEO decided to do. Voting privileges are a powerful thing.
On the flip side Eddie the "creditor" had to actually lay down hard cash out of his pocket for every nickle he loaned Sears. H As just a shareholder in a bankruptcy Eddie had very little power and odds of any "recovery" were basically impossible... but Eddie the secured Creditor has all the power and options. Bankruptcy laws are made to protect creditors not equity holders.
Think of it this way..If someone gave you a new car and you had a second car that was worth far more that you paid cold hard cash to get which car would you keep if you had to get rid of one?
A look at Form 4's EL has filed over the years would reveal how many of his shares were "awarded" and how many he actually purchased.
Current Report Filing (8-k)
Date : 03/19/2019 @ 9:55AM
Source : Edgar (US Regulatory)
Stock : Blue Dolphin Energy Co. (QX) (BDCO)
Quote :$1.12 down -0.01 (-0.88%)
On March 19, 2019, the Lazarus Parties and GEL entered into a Fourth Amendment to the Settlement Agreement (the “Fourth Amendment”). The Fourth Amendment (i) further extended the Settlement Payment Deadline from May 1, 2019 to July 31, 2019 (unless extended in writing by GEL) and (ii) further extended the dates for achievement of certain milestones related to the Settlement Financing.
"Sears" was "reorganized" ok but old Sears was not recapitalized in order to accomplish that reorganization. This is a very complex and rare bankruptcy you're dealing with.
Eddie Lampert had a choice to make. He is either Eddie Lampert the shareholder.. or Eddie Lampert the creditor and he chose to be Eddie the creditor. Why? Because he has what is known as a "conflict of interest". And when that happens the shareholder (no matter who it is or how large his equity stake is) ALWAYS chooses and uses his or her position as a creditor to its fullest advantage. Why? Because bankruptcy laws were made spefifically to protect creditors above all others. It is called " absolute priority". Look it up. Eddie the shareholder, according to the rule of absolute priority, is at the bottom of the totem pole..so are you..but Eddie the creditor (and not just any creditor but a secured creditor) is top dog over all comers.
By no means reliable and fwiw volume is up today too
United Development F (UDFI)
4.1 up 0.17 (4.33%)
Volume: 99,046
I don't think a ch 11 POL discharges all of the small business debts ?? ..which is kind of the point..but we're in uncharted waters here so I simply am not certain..we'll find out what they have in mind if they go with a ch 11 POL.
It goes without saying that what we have here is complex. We may never see another situation like we have with this multi-billion dollar Sears bankruptcy that turned into multi-billion dollar asset sale to the ex-ceo who happens to be the 1) the largest equity holder 2) the largest and #1 secured creditor..and 3) owner of the hedge fund that purchased all of Sears assets worth buying. You won't see that every day!
I not certain but I think any "plan" put forth, including a plan to liquidate (POL) must be voted on by the various classes of securities. If so Eddie has a "conflict of interest"...which may determine how Sears gets liquidated ..and by whom. Will it be the DIP..or the court appointed Trustee? If pushed I think it will be a Ch 7 Court appointed Trustee.
Bankruptcy is expensive business for all parties involved. The estate has allready said it is "adminstratively insolvent" which means prolonging a ch 11 is not likely. The likelihood of a "successful" liquidation no matter who comes up with the POL wherein all debt claimants get 100% paid is simply impossible..not gonna happen. And my guess is a Trustee is the cheapest and fairest way to go and quite possibly the only legal avenue considering ESL's various positions in all of this. ??
Every situation is different. For example (and this is an extreme example) but I have a stock that was in ch 11 for 6 years...made the transition to ch 7 ..and has been in that state for the past 8 years. 14 years in total.
Yes. Once the US Trustee completes his job and the ch 7 case is closed the shares will be deregistered. But until then the stocks can and will trade. They are known unofficially as "zombie stocks"...the walking dead!
The Trustees' job can take quite a while to complete. It could be a year...possibly less but its a slow process to unwind something like we have in this Sears case.
Ch 11 is filed to give the estate the time and the opportunity (with protections) to come up with a POR.. but once its been established a POR is no longer a viable possibilty the case is transitioned to ch 7 liquidation. Its not a "whole new bankruptcy proceeding". In ch 7 the "debtor in possession" (DIP) is no longer in control of the company. A US Trustee will be assigned by the bk court to take over the affairs of the company and tasked with the job of liquidating and distributing any remaining funds in the estate.
There is no doubt a wind-down team hired by the estate in place to oversee the dismantling of what is left of the "old" Sears. It's important to note that the estate is "administratively insolvent" which will make for some interesting squabbles among the lawyers as to which of them gets paid and who doesn't.
What does all of this mean? It means the old sears has died and the estate doesn't have the funds to pay the "doctor bills" much less the funeral.
The lion's share of Sears job postings you may come accross are for the 400 "new" Sears stores ESL purchased that will remain open for business.
Marker:
Sears Holdings Corp. (SHLDQ)
0.9805 up 0.1504 (18.12%)
Volume: 2,647,304
Eddie is doing what's best for Eddie...just like you do what's best for you. The only difference is Eddie does it with more money. I do think billionairs can lose touch with reality. But anyone who has followed ESL and Sears the past dozen years has known the real play on Sears was in the Real Estate they were sitting on. The stock was secondary.
I have no beef with ESL.