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WARNING, THIS MAY BE TOO LONG FOR SOME OF YOU TO ABSORB. CAUTION, MAY CAUSE EYE FATIQUE AND OTHER SYMPTOMS. READ AT YOUR OWN RISK.
A judge has “strongly” advised Eddie Lampert’s hedge fund, which bought Sears out of bankruptcy last month, to hand over millions of dollars to the old Sears.
At a Thursday hearing, US Bankruptcy Judge Robert Drain weighed in on the contentious financial dispute between Sears and Transform Holdco, the firm owned by billionaire investor Eddie Lampert’s hedge fund ESL Investments, which bought most of Sears’ assets out of bankruptcy last month.
Drain seemed to side with Sears, which says Lampert’s ESL swiped tens of millions from its coffers in the days before it closed on a $5.2 billion deal to create a new, smaller Sears chain with 425 stores.
The judge warned that if ESL does not return the funds — about $14.6 million in credit card receivables and $18.5 million in cash — that it could be in violation of an automatic stay and liable for damages.
“He told both sides: ‘You have a contract; live up to it,’” according to David H. Wander, a partner of Davidoff Hutcher & Citron.
Drain indicated that he’d settle the matter at a hearing on April 18.
some interesting line items in 4th monthly billing statement from fti to shc:
these three entries for time billed on 2/13:
Conduct research re: interplay "G" reorganizations, worthless stock deduction timing and tax years
Conduct research re: section 381 rules and timing of worthless stock deduction
Participate on call with Akin and Houlihan re: timing for worthless stock tax deduction and character issue
this entry was for time billed on 2/28:
Participate on call with Committee re: draft POR term sheet provisions, winddown budget, Chapter 7 alternatives and KEIP payments.
entry from 2/11 to 2/18:
Draft wind-down and remaining issues list
Update wind-down and remaining issues list for follow up with M-III
Review memorandum to Akin re: wind-down budget, 1Q KEIP, data preservation and TSA.
Review and provide comments on summary from M-III call re: wind-down
Prepare response to M-III re: wind-down budget
entries from 2/26 to 2/28:
Participate on call with professionals re: wind-down budget, proposed plan, and next steps.
Edit and supplement the question list to the Debtors on the wind-down budget.
Perform detailed review of the wind-down plan
Participate on call with professionals re: wind-down budget, proposed plan, and next steps
Participate on call with professionals re: wind-down budget, proposed plan, and next steps.
Prepare diligence questions re: wind-down budget
Review the wind-down budget.
Review open items from call with M-III re: wind-down budget
Participate on call with M-III re: administrative solvency tracker and wind-down budget.
Participate in meeting with team re: updated work plan, call with Houlihan and Akin re: agenda for meeting with Debtors' and Restructuring Committee's Advisors re: wind-down and form of plan of liquidation.
well, that's why it can be said there are many who look but can not see and mean who listen but can not hear.
if someone can not explain in a couple of paragraphs why they think lampert will acquire what's left of shc which he does not already own, i feel they have a distinct misunderstanding and mis-comprehension of what is going on and what is going to happen.
an inability or refusal to support a position so firmly held makes it seem to be on pretty shaky ground.
for anyone who has bothered to read my posts, they know at one time i held 40k shares of this stock and that i sold all of them.
they also know i am continuing to look at everything i can to see if my evaluation of this stock is incorrect.
they also know i have stated on this board if i find that to be the case i would get back in and be satisfied with a return of 2x to 5x.
that's why i keep looking and keep posting to this board but those who are just too busy to explain on any type of factual basis why they believe this stock is going to survive aren't really doing much to satisfy the questions which are still unanswered.
when i post and refer to old sears and new sears, it is being done to clarify what i'm saying. when others post and just indiscriminately refer to sears, without any clarification, no only do i have a hard time understand what is being said, but it leaves me believing the poster has no idea about what is going on.
lion,
that's a much easier post to address.
what i have taken your posts to mean in the past is that you believe that shc and its subsidiaries will end up with eddie (esl or whatever you want to call it).
however, shc is the holding company (as in sears holdings corporation) and shc, as the holding company, entered into bankruptcy along with a large number of its subsidiaries. so, collectively, shc and its various debtors became the debtors in the current bankruptcy.
after transform completed the acquisition of substantially all of the go-forward assets, it left shc, the holding company, no longer holding those assets which transform holdco acquired.
essentially, shc was left holding the debt associated with all of the subsidiaries which were transferred to transform holdco. shc was left with the sole responsibility for paying the administrative claims.
shc is currently conducting a large number of going out of business sales and using that money to pay both administrative costs and other claims. at the end of this process, from all accounts which have been provided, shc will be unable to fully satisfy all of these claims. that would leave a liability for anyone seeing to do some type of combination with what's left of the sears which is in bankruptcy.
a good question to ponder is why might shc declare administrative insolvency? if they were to do that, the implication is they are unable to pay less than half a billion dollars in administrative claims which leads one to believe there is no way they could pay the outstanding 6 or 7 billion of debt.
right this minute, transform holdco is an llc wholly owned by lampert. it IS the holding company which is "receiving" the assets which it bought. there have been posts on this board showing that lampert is currently setting up individual llc's in various states as individual business entities under the parent company, transform holdco.
so, it seems the suggestion or solution which you have posted is one which is already being implemented by lampert and it is all being done without any consideration to the sears holdings corporation shell which has been left behind in bankruptcy or the common stock currently being traded under the symbol "shldq".
shldq is NOT the sears entities which eddie purchased via transform holdco.
i take it when you refer to "Sears" you mean shc. if that is the case, then there would be no "along with all its subsidiaries". the assets of those subsidiaries have already been purchased by transform holdco.
as an example and as i have posted on this board before, if you look at new corporate entities being set up in Delaware, there are two which can readily show how lampert is preparing to deal with things.
there are two T F Hoffman Estate LLC's which were set up within the past two months or thereabouts. Transform Holdco purchased SHC's corporate headquarters and corporate campus outside of chicago. I believe that eddie is setting up the 2.2 million square feet of corporate office space he purchased as a separate llc which would be a standalone asset. the other one i believe is the 200+ acres of undeveloped land surrounding the 2.2 million sq. ft. office building. that can be sold and or developed over a number of years to eddie's sole benefit.
i just see no reason for eddie to try to reacquire the shell of what remains of the sears which is still in bankruptcy.
occam's razor
eddie is not worried about MOASS and suggests it's more important to worry about YOASS.
he is not going to do anything to change his share structure in shldq so that he doesn't adversely impact his ability to utilize the nols and tax credits, all assuming he gets a favorable tax opinion or irs private letter ruling.
if he fails to receive a favorable tax opinion or an irs private letter ruling, he might try to dump his shares and take anything he can get for them which would pretty much tank the share price.
if he gets the favorable tax opinion or the private letter ruling from the irs, then he will most likely just let his shares of shldq rot on the vine.
the document specified three taxable years, not calendar years. don't know what the taxable year end date is.
thank you for posting such an informative article which clearly demonstrates why shldq shareholders will not be saved by transform holdco. what's your agenda? on the one hand you seem to be cheer leading the stock while on the other hand you re-post an article which clearly has nothing to do with the shc/transform holdco transaction while pretending it does. are you really short this stock?
this doesn't have any relationship to what has happened among shc and its subsidiaries and transform holdco.
first of all, transform holdco purchased substantially all of the "go-forward" assets of the selling company. your example states the only real asset purchased was receivables.
second, there is no continuing business relationship between transform holdco and shc and its subsidiaries.
this is NOT a situation in which transform holdco is the "holding company" and shc and its subsidiaries are the "operating companies". the benefits of the nols and tax credits will be realized over a number of years while the asset purchase agreement establishes that shc and its subsidiaries will be wound down and liquidated within three taxable years after the closing date of february 11, 2019.
shc and its subsidiaries which are still trading on the otc under the symbol "shldq" are divorced from transform holdco.
third, the nature of the 363(f) sale to transform holdco is the transaction which insulated transform holdco from any of liabilities of shc and its subsidiaries. look at the caption on the order from judge drain approving the sale.
transform holdco has already stated that while it is a private company owned 100% by lampert, it might in the future go public. in the event transform holdco issues stock in transform holdco entity, this securitization would have nothing to do with shc, its subsidiaries, or shldq stock.
think it is important to remember that lampert has stated he intends to do things with the assets he purchased which shareholders would find distasteful. that would indicate he has no immediate intentions of securitizing the assets he purchased from shc and its subsidiaries.
so once again, thank you. i hope the board will read and understand the implications of the article you posted twice!
"There is no validity to the name "old SEARS " that seems to have been a necessity for the media to report info on the happenings btw."
Bankruptcy Judge Pushes New Sears to Resolve Dispute With Old Company
Old Sears claims Eddie Lampert’s new Sears still owes it millions of dollars
By Lillian Rizzo
March 21, 2019 5:20 p.m. ET
Edward Lampert’s new Sears was pushed by a bankruptcy judge Thursday to smooth over its disagreements with the entity left behind in bankruptcy protection.
Mr. Lampert’s new Sears, known as Transform Holdco LLC, and the old Sears, still known as Sears Holdings Corp., have been sparring over the terms of new Sears’s purchase of the company’s assets
By Lillian Rizzo
March 21, 2019 5:20 p.m. ET
Edward Lampert’s new Sears was pushed by a bankruptcy judge Thursday to smooth over its disagreements with the entity left behind in bankruptcy protection.
Mr. Lampert’s new Sears, known as Transform Holdco LLC, and the old Sears, still known as Sears Holdings Corp., have been sparring over the terms of new Sears’s purchase of the company’s assets.
also look up the willens (think that was his name) article which was posted on the board about nols as well as the bloomberg article about the nols
you will have to back door the search. do one for "tax attributes" and then you will have to search what that means.
also look at page 116/1203 and read the "distribution requirement" language for the wind down/liquidation requirement withing 3 taxable years.
docket #2456 page 148/155 deals with the securities consideration
docket #2507
runner,
you are making an assumption with which i am at odds.
i don't believe there will be a conversion to holdco stock. i believe that shldq shares will be declared worthless, will not be exchanged, and will not be trading on any exchange.
the "two company" scenario is fact. eddie, through transform holdco, has the assets and shc has the liabilities.
the asset purchase agreement which was signed by all parties provides that sears and its debtor subsidiaries will wind down and liquidate within three taxable years from the closing date of february 11.
i don't believe there is anything left around which shc can reorganize. i believe it will just be gone along with its stock (shldq). eddie, through transform holdco, doesn't need to exchange holdco stock for shldq stock. the only securities consideration (i.e. stock) which holdco provided shc was the 3000 shares of class b securities in holdco.
it's those securities which will be exchanged and it appears the mechanics of that exchange will be that it goes to creditors only, and most likely only to the superpriority creditors, which means that lampert will just get back most or all of the 3000 shares of class b stock.
as i said, that's my analysis based on the documents, the bankruptcy code and the tax rules.
i still keep checking to see if there are any new filings which might undermine my analysis but have found none to date.
all the "arguments" against my analysis boil down to "why would eddie walk away from his 55+/- million shares of shldq stock? that's just emotion with little thought behind it.
with or without any consideration for his shldq stock, eddie already owns ONE HUNDRED PERCENT of everything that holdco purchased. how is it that anybody thinks he can possibly get more than the 100% he already owns?
i have backed up my analysis with links based on what has actually taken place. others have argued commons will be saved based on a "what if" scenario which not only hasn't taken place but which has actually been preempted by what has taken place.
nobody has provided any documentation to refute the language in the asset purchase agreement which dictates that shc and its debtor subsidiaries WILL WIND DOWN AND LIQUIDATE within three taxable years after the closing which occurred on february 11.
if shc and its debtor subsidiaries wind down and liquidate i am at a loss as to why anybody can reasonably think they have anything around which to reorganize.
ANYBODY?
i think the warrants can be purchased through tda
mockba, that might just be a sucker play.
as i remember, the warrants are convertible at a price which is not even close to being in the money. for a number of weeks the volume being traded was very thin which made getting in and out somewhat hard.
with increased volume it might be a flip play but i certainly don't see any conversion value there.
"Yes. A tax reorganization. Not a buy out. So again. Its the same f ing company."
therein seems to be the confusion.
sears holdings corporation (shc) and various of its subsidiary companies filed for bankruptcy. at the time those entities filed for bankruptcy they had a lot of f ing stuff. included in that stuff were a lot of properties, pension obligations, thousands of leases and contracts, pension obligations, a lot of debt and around 110 mm shares of outstanding stock.
along comes transform holdco which is 100% owned by eddie lampert. in exchange for $5.2 billion of consideration, transform holdco purchased substantially all of the "go-forward" assets of shc and it subsidiary compamies who jointly filed for bankruptcy. those assets included real estate, the tax attributes (nols and tax credits), and thousands of leases and contracts which were or have not yet been accepted or rejected by either shc and its subsidiaries which jointly filed for bankruptcy or transform holdco.
the deal for that transaction closed on february 11, 2019. transform holdco has until around april 12, 2019 to accept or reject those leases and contracts which were a part of the various sales transactions.
what's left are two distinct and vastly different entities. what i and others have referred to as "old sears", a term with which you take issue but for clarification seems appropriate. so that you can understand it and not be confused, i will continue in this post to refer to what was left behind after transform holdco purchased everything it purchased as shc and its other debtor subsidiaries. what lampert purchased will be called transform holdco.
sears and its other debtor subsidiaries now have left a number of stores and properties at which going out of business sales are being conducted. after those sales are complete, the properties and stores, if they were not ones purchased by transform holdco, will be sold or monetized in some fashion and the consideration received will be paid to those to whom shc and its debtor subsidiaries owe money.
sears and its debtor subsidiaries also owe a lot of debt to creditors which remained with them because all of the assets purchased by transform holdco were purchased and transferred free and clear of any of that debt. those remaining creditor obligations are the responsibility of shc and its debtor subsidiaries to pay off (probably at pennies on the dollar).
sears and its debtor subsidiaries also had pension obligations which did not pass to transform holdco. the pbgc stepped in and assumed control of those two pensions from sears and its debtor subsidiaries without any additional obligation on the part of transform holdco.
sears and its debtor subsidiaries have retained a large number of professional lawyers and advisors which are the source of the various administrative claims against the estate of shc and its debtor subsidiaries. the obligation for paying these administrative claims belongs to shc and its debtor subsidiaries.
because some of the debt of sears and its debtor subsidiaries has a super-priority claim status, those debts will be paid ahead of any administrative claims, which otherwise would have been first in line for reimbursement. interestingly, those super-priority claims belong to lampert entities.
the stock currently trading on the otc exchange as shldq has nothing to do with transform holdco. if you look at the asset purchase agreement the securities of shc and its debtor subsidiaries were specifically excluded from those assets which were purchased by transform holdco. hence, the transactions which were made by transform holdco constituted an asset sale by shc and its debtor subsidiaries to transform holdco, not a stock sale.
it was the structuring of the various transactions which gave rise to the situation referred to as a "tax reorganization" in the asset purchase agreement. the benefits of the "tax reorganization" accrue to transform holdco, not shc and its debtor subsidiaries.
what's left after transform holdco's transactions is one company, 100% owned by eddie lampert, that company being transform holdco, which owns what has been described above and another company composed of shc and its debtor subsidiaries, which "owns" all of the remaining debt and administrative claims as well as the obligation to pay for those things. additionally, shc and its debtor subsidiaries are REQUIRED by the terms of the asset purchase agreement to wind down and liquidate withing three taxable years from the closing of the transaction to transform holdco. it is for the above reasons that shc and its debtor subsidiaries are sometimes referred to as a "shell" or a "worthless shell".
lampert seems willing to walk away from the 55 +/- million shares of shldq stock he holds. in the larger scheme of things, paying himself and all others who own shldq stock doesn't seem to provide any upside but it certainly would mean assuming a lot of downside.
SO, WHEN YOU CLAIM ITS THE SAME F ING COMPANY, I'M AT A COMPLETE LOSS TO UNDERSTAND WHAT THE F YOU ARE TALKING ABOUT.
MAYBE, IF YOU EVEN UNDERSTAND IT, YOU COULD EXPLAIN IT TO US WHO DON'T.
THANKS
items 3,4 and 5 under contested matters are all going forward.
since no objection was filed for item 3, even though it was originally listed as a contested matter, it will go forward as uncontested. items 4 and 5 had objections filed against them so both of those will go forward as contested matters.
chemist,
the first item under contested matters had no objections filed so it is going forward as an uncontested matter.
the next two had objections file and each of them are going forward as contested matters.
chemist,
look at the three contested matters involving enforcement of the apa and the appointment of a mediator.
says they are all going forward, i.e. they will be heard tomorrow.
docket 2920 just filed today describes the party going on in judge drain's courtroom tomorrow.
i didn't say otc stocks were worthless.
that's the problem with people who don't bother to read what's posted, it is they who twist the words.
chemist ask if i still thought shldq would continue to trade if old sears were liquidated.
i believe my answer was that so long as old sears was in existence its stock would probably continue to trade.
i then added if judge drain were to declare old sears to be administratively insolvent that old sears would be left to fight things out without the protection of bankruptcy court and the stock might be declared (by old sears) to be declared worthless in a way which would remove any ambiguity as to what worthless meant.
so, read what i wrote instead of twisting what i said.
i believe i have been very clear and transparent about my feeling as to what is going to happen with shldq. that doesn't mean i have an agenda or that i am short the stock. i'm just expressing my opinion and in most instances i have backed my opinions up with direct citations to posted documents which have been filed in this case.
when the documents say that old sears must be liquidated within three taxable years after the closing date, that is not an opinion. it is a fact. if you or others choose to ignore facts such as these, that is your option. however, don't suggest it is i who am twisting facts.
the documents say when transform holdco purchased substantially all of the go-forward assets of old sears in a such a manner as to be considered a tax reorganization, that is a fact.
then the order stated that transform holdco purchased substantially all of the go-forward assets free and clear of liens and debt, that is a fact.
all of the baggage was left behind with old sears and it is a problem with which old sears has to deal, not lampert.
thanks for that correction, ihub
yes, shldq is already delisted. so, answering chemist, guess they could be declared worthless by shc with no ambiguity left as to what that means.
imo, it's the ambiguity which keeps this stock trading, not any underlying intrinsic value.
know most left on this board don't agree, but having a seat when the music quits playing will not be good enough. anyone who had any doubts as to the meaning of "elvis has left the building" will surely understand it if this plays out as i suspect it will.
although volume is drying up, flippers will probably still be able to make some occasional scores. but i just don't see how this story ends well for anyone in the buy and hold camp.
i keep looking at the dockets and reading the posts here in case that proves to be wrong, but i'm not very optimistic.
chemist,
so long as the liquidation had not been completed, don't know why the stock couldn't/wouldn't continue to trade.
i suppose if old sears were to be declared administratively insolvent and the judge dismissed the case and left old sears to just fight it out in court without the protection bankruptcy would otherwise provide the shares might be declared worthless and delisted at that point. but that's just a guess.
actually, while page 747 might be considered proof of stockholders surviving, what actually took place would have had to be the example shown.
that's not what happened. page 748, while also labeled as one potential example of things which "might" happen, in fact is what in actuality did happen.
remember, this docket was filed a week before transform holdco's bid was approved by judge drain. so while it presented a number of possibilities, the only controlling one is the one which actually took place which is the example shown on page 748.
_______________________________________________________________
language from page 748:
Potential 363 Sales as Tax Reorganizations
-
A BC Section 363 sale of a corporate debtor's assets for a mix of acquirer stock and other consideration can potentially qualify (in whole or in part) for tax reorganization treatment. To the extent it does, an acquiror may be able to achieve similar tax results as those described above under a Chapter 11 plan.
- To qualify for tax reorganization treatment -
• The sale of assets and subsequent distribution to editors/shareholders of the sale proceeds must be pursuant to a single plan and arrangement for tax purposes.
- The sales agreement would constitute such plan (and would so provide) and generally would require that the "liquidation" of the seller corporation be completed from a tax perspective within a specified period (whether under a Chapter 11 plan or otherwise).
• In addition, qualification as a tax reorganization depends on the composition of the ultimate distribution of consideration to creditors/shareholders under the plan (stock vs. non-stock), as
well as the satisfaction of certain other requirements.
• Whether these various requirements could be satisfied depends on the facts and circumstances of the particular transaction, and becomes more complex in a multi-tier structure (as we have
here).
- As previously indicated, however, there potentially could be significant tax costs not present in a
Chapter 11 restructuring of the existing group.
____________________________________________________________
compare the above to judge drain's order.
judge drain approved the transaction among shc and it various subsidiary debtors and transform holdco as a 363 asset tax reorganization sale.
when it says the sale must include acquirer stock and other consideration it did. the acquirer, transform holdco, provided 3000 shares of transform holdco class b securities in addition to other consideration which in the aggregate totaled $5.2 billion.
when it says "the sale of assets and subsequent distribution to ceditors/shareholders of the sale proceeds must be pursuant to a single plan and arrangement for tax purposes". this is also what happened as evidenced by judge drain's order. lampert was both a creditor as well as a shareholder. he is also the 100% owner of transform holdco. so, when transform holdco purchased the assets the requirement that there had to be a majority creditor/shareholder in the old company who was also a majority creditor/shareholder in the new company was satisfied.
when it says "The sales agreement would constitute such plan (and would so provide) and generally would require that the "liquidation" of the seller corporation be completed from a tax perspective within a specified period (whether under a Chapter 11 plan or otherwise)" this was also provided in judge drain's order. the asset purchase agreement was designated an approved plan of reorganization and the asset purchase agreement also provided that the "seller corporation" (shc and it debtor subsidiaries) would liquidate within 3 years of the closing of the sale. so that means that shc and its debtor subsidiaries will have to wind down and liquidate within three years from february 11, 2019 (the Closing Date).
when it says "In addition, qualification as a tax reorganization depends on the composition of the ultimate distribution of consideration to creditors/shareholders under the plan (stock vs. non-stock), as
well as the satisfaction of certain other requirements", this was also addressed in judge drain's order.
the composition of the ultimate distribution as it relates to "stock" would be the distribution of the 3000 shares of class b holdco stock which will be distributed back to lampert as a result of his position as a superpriority creditor. that means that the stock lampert gave to old sears as securities consideration will just come back to him.
so, all in all, i still am of the belief that holders of shldq will be eliminated, cancelled, and wiped out with no further consideration.
page 747 is one possibility of what could have happened but it did not happen so therefore that example does not control in this situation.
"in order for the NOLS to be transferred EL would need to buy the stock. You are talking about billions left behind."
not necessarily true:
linked article below has been posted before but seems to have been ignored. while the author thought the "securities consideration" was somewhat opaque, the docket clearly spells out what the securities consideration is. the securities consideration is 3000 shares of class b stock in transform holdco which will be distributed in accordance with the distribution agreement set forth in the apa.
https://news.bloombergtax.com/daily-tax-report/insight-sears-net-operating-losses-will-survive-bankruptcy
hadn't fully felt the impact of my first cup of coffee yet.
are the comments about not belonging in bk and the alleged shady practices of aurelius and the desire to exit in short order materially any different from those found in the 8k filed on 2/28?
just not sure any real new ground was plowed here today with the most recent announcement when compared to prior statements.
not suggesting this is bad in any way, just saying it's not new.
the new 8k is filed to announce an entry into a material financial obligation. they are talking about he $1 billion citi loan facility.
additionally, the obligation is set up to be a superpriority claim which means it will be paid before any administrative claims.
think it's jumping to conclusions that this means exiting from bk soon. just a required filing.
actually, the citi loan is well within the scope of bankruptcy.
the citi loan has a superpriority claim which means that it will be paid before any administrative claims.
it is set up so that citi is at the very front of the line for purposes of repayments.
the irs is not being asked to determine if the nols transfer. eddie already has them. what the irs is being ask to do is provide a private letter ruling stating that eddie can use those nols which he has already purchased.
no he would not need to buy the stock.
he only needs to be a majority holder of stock in both the old and new company and some stock in the new company would have to be exchanged with stockholders of the old company.
in bankruptcy, holders of debt are considered to be stockholders for purposes of this requirement.
transform holdco's securities consideration was for 3000 shares of class b stock in holdco. these 3000 shares were to be distributed. since eddie and various of his entities held debt in old sears, and that debt was a superpriority debt, eddie will just get back some/all of those 3000 shares and that will satisfy the requirement.
at no place in the "g" reorganization requirements does it say that common shareholders will be bought out or given consideration.
eddie was a majority shareholder in the old company, he controls 100% of the new company, he purchased substantially all of the go-forward assets of old sears, holdco provided stock consideration as part of its purchase price.
while it might seem rational for eddie to purchase all of the old sears common shares because he owns 50+ million of those shares, fact is he doesn't need to. it would only dilute is already 100% ownership in holdco.
north,
facts are stubborn things and yes, this sale did constitute a reorganization.
this is directly from judge drain's order (docket 2507)
Section 2.12 Tax Reorganization. (a) The Parties intend that the transactions set forth in this Agreement, as structured and implemented as described in Section 9.2(a), together with the Bankruptcy Plan (as defined below), will ... (i) constitute one or more plans of reorganization under section 368(a) of the Code (as defined below) and (ii) as qualifying as one or more reorganizations thereunder (a “Tax Reorganization”)
and this is the language from the asset purchase agreement which judge drain approved:
Sellers agree to cooperate with Buyer in order that, for federal income Tax purposes, the transactions effected pursuant to this Agreement, together with the distributions made by, and liquidation of, Sellers pursuant to the Bankruptcy Plan, are treated as one or more plans of reorganization under section 368 of the Code and as qualifying as one or more reorganizations under section 368(a)(1)(G) of the Code
north,
this was a 363 asset sale and it was a "G" reorganization, all as approved by judge drain in his order.
as such, under the "G" reorganization provisions, the nols transferred to eddie.
"March 21st is the day Old Sears and New Sears meet for mediation"
probably not. march 21 is an omnibus hearing.
eddie is asking the judge to approve mediation and old sears is asking the judge to deny the request. the 21st is not a day of mediation, it is rather a day which may determine whether or not there will be mediation. old sears asserts judge drain is all too familiar with the issues an no need to go with mediation.
old sears is asking the judge to order eddie to pay $57.5 million which eddie has withheld from old sears associated with cash in transit which was an issue because old sears turned over its cash management system to eddie because eddie failed to have a cash management system in place at the time the sale closed on february 11.
old sears is supposed to be providing an update on the por status. but, since old sears has said they don't have the money to work on the por since eddie is withholding the $57.5 million, it doesn't seem likely that any significant por update will be provided.
old sears has stated they could be facing administrative insolvency because eddie is witholding the $57.5 million merely as a negotiating strategy to get old sears to agree to mediation. despite judge drain's cautionary comment when he approved the apa that sears could still face administrative insolvency, can't imagine he will be happy with eddie withholding this money as a negotiating tactic.
probably both sides were to provide updates on how the transfer from old sears to new sears is going and update their timetables. however it doesn't seem like old and new are working very well together at this point so i would think that judge drain will not be in a good mood during this hearing.
"Why.did.WINMQ.borrow1.BILLION.dollars to"make it through"bankruptcy???"
because they could!
whether aurelius did nor didn't probably doesn't matter. now that win is in bk court and under the protection of bk rules, aurelius and the other's involved as a result of the cross defaults will probably have their lunch along with their a$$e$, handed to them on a platter. can't imagine a situation in which those debt instruments would not be restructured forcefully by judge drain.
if judge drain accepted the retention of employees argument in a recent case he is hearing, can't imagine he would not be most sympathetic to the potential losses employees would be exposed to if this whole thing were to go under, not the least of which would be equity losses as a result of "forced" investment via their retirement plans.
since the first day docket showed assets in excess of liabilities and this appears more of a restructuring issue than one of insolvency, this doesn't seem to be the doom and gloom end that some are predicting.