linda,
this was from the proposed order:
Z. Valid and Binding Release.
The proposed compromise and resolution embodied in the Credit Bid Release (as defined below and as reflected in Section 9.13 of the Asset
Purchase Agreement) is reasonable and appropriate and a valid exercise of the Debtors’ business judgment, and the consideration provided for in the Asset Purchase Agreement, including the Credit Bid Release Consideration and other good and valuable consideration provided to the
Debtors and their Estates in connection with the Sale Transaction, constitutes fair and appropriate consideration for the Credit Bid Release. The Credit Bid Release is required by the Buyer in order to enter into and perform in accordance with the Sale Transaction and providing such release is in the best interests of the Debtors, their estates, creditors and other parties in interest. The Claims and causes of action released through the Credit Bid Release are complex and in the absence of the release would involve extended and expensive litigation, the outcome of which would be uncertain.
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esl/lampert obviously realized the impact of neverending stream of litigation over his management of sears and is attempting to put an end to it with this release language.
the judge will have to weigh the "merits" of the unsecured creditor's claims against the "damage" it would do to esl's ability to take over and operate the assets purchased by esl. if esl has to get mired down in endless litigation, the judge might view that as a situation which could force esl/sears back into bk court.
the unsecured creditors did nothing at the time to mitigate the damages they now claim and i think the judge will not look favorably on that.
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re: an earlier post on debt swap and the impact on commons, it seems that esl/lampert have no debt to swap since they have cancelled that debt as part of their bid (a credit bid). they didn't cancel the debt in exchange for equity, they just cancelled it. that leaves esl and its controlled entities still holding common stock.
still doesn't seem like they would cancel the only equity interest they have given it is a majority position.
conversely, guess esl could prevail in its bid, say what they have is privately controlled and there is NO equity position, including their own. however, given the language in the proposed order, that certainly would not fit the description given of no restructuring along those lines.
still a lot of uncertainty which is why the stock will probably trade like yesterday until we hear something from the hearing on the 4th. possible the judge will say he will take everything he heard on the 4th under consideration and make a ruling at a later date.
