linda gleaned the following from the purchase agreement:
“ The Sale Transaction does not constitute a de facto
plan of reorganization or liquidation as it does not propose
to (i) impair or restructure existing debt of, or equity
interests in the Debtors, ......”
but the good news is there is even more from that section.
first thing is to address what is meant by a de facto por.
a de facto plan of reorg. has sometimes been referred to
as a sub rosa (i.e. under the table) plan or a creeping plan
of reorg. by that is meant a plan in which some type of
agreement outside of the bankruptcy plan is sought which
could have a significant impact on the bankruptcy case and
the bankruptcy estate.
in other words, they are saying there are no shenanigans
going on. that this is NOT a de facto or sub rosa por.
also included in section Y was a provision which stated the
purchase agreement did not propose to (ii) impair or circumvent
voting rights with respect to any plan proposed by the Debtors.
in other words, the stockholders will be able to vote on the por
important to remember it is sears which filed for bankruptcy and
it is sears which will file the plan of reorganization. that is why
the Debtors are always referenced in the agreement.
additionally, section Y had a provision which stated the por did
not propose to (iii) circumvent chapter 11 safeguards, such as
those set forth in sections 1125 and 1129 of the Bankruptcy Code
bankruptcy code section 1125 deals with disclosures and
solicitations and section 1129 describes the parameters of
plan confirmation
finally, section Y had a provision which stated the por did
not propose to (iv) classify claims or equity interests or extend
debt maturities
this final section seems to say there will not be any attempt to
prioritize claims or equity (i.e. stockholder) interests. that kind
of sounds like remaining creditors will be satisfactorily taken
care of, which in and of itself indicates stockholders will not
be wiped out. this seems to be further supported by the fact
debt maturities will not be extended which means interest
and principal will be paid on time.
so, unless this is all boilerplate smoke and mirrors while
singing "don't worry be happy" it would seem to strongly
suggest common stockholders will survive. the question
is, in what manner?
i believe there will be a name change if the esl bid is
approved by the court. if that is the case, then the existing
shares will be cancelled and if Section Y (i) stands, the
existing shareholders will have their shares exchanged
for shares in newco 1 for 1 given the language which says
no impairment or restructuring.
obviously we will know more as time goes on. in the
meantime, until feb 4th, the stock will move up and down
unless some real information is provided.
even if the 4th provides approval for the esl bid, the last
bit of uncertainty re: stockholders will not be absolutely
finalized until the por is put forth, approved by the judge,
and voted on.
