I think I finally cleared up my confusion between
the APA and the POR.
This is my new opinion:
In viewing the “ Order Approving the APA “
again I noticed that the Sale is a 363 Sale that
is free and clear of all Claims - including
Security Interests.
PG 13 of ORDER -
“ P. Satisfaction of Section 363(f) Standards.
The Debtors may sell the Acquired Assets
free and clear of all liens, claims (including
those that constitute a “claim” as defined in
section 101(5) of the Bankruptcy Code),
rights, liabilities, mortgages, deeds of trust,
pledges, charges, security interests,..... “
PLUS the Order also states that the Sale is
NOT a continuation of Sears with Holdco as
a Successor - PG 10 of ORDER -
“ The Buyer (i) is not, and shall not be
considered or deemed a mere continuation of,
or successor to, the Debtors in any respect;
(ii) has not, de facto or otherwise, merged with
or into the Debtors; and (iii) is not a continuation
or substantial continuation, and is not holding itself
out as a mere continuation, of any of the Debtors
or their respective estates, businesses or operations,
or any enterprise of the Debtors and there is no
continuity of enterprise between the Debtors and
the Buyer. “
The above two facts in the Order eliminates the
Equity Interests - SHLDQ - from the Sale. And so
the SHLDQ stock will remain with the Debtors
in Bankruptcy.
However - the APA states that Holdco will pay
“ Securities Consideration “ in the form of
Holdco Debt or Equity Securities to the Debtors
on the Closing Date of the Sale - PG 53 of APA -
“ Section 3.3 Closing Payment.
(a) At the Closing, Buyer shall:
(i) pay ................................. and
(ii) deliver the Securities Consideration to the Sellers. “
The form and amount of bonds/shares will be
determined by the Buyer Holdco.
The “ Securities Consideration “ is a part of the
PURCHASE PRICE - PAGES 51 - 53 of the APA.
DOCKET 1730 - PAGE 8 of 315 - defines the
“ Securities Consideration “:
“ d. The “Securities Consideration” which means
debt or equity securities in Buyer, in an amount
and form to be determined by Buyer in an amount
and form reasonably acceptable to Buyer, including
as to subordination “
I think it is these Holdco Bonds and Equity Shares
which will be distributed to the Unsecured Creditors
and Shareholders - per the POR.
The APA reads to me like all of the Secured Creditors
will be paid in Cash.
In the process of a 363 Sale, all of the proceeds
of the Sale - such as Cash , new Stocks and
Bonds in the Buyer - go to the the Debtors’ Estate
and then are distributed first to the Creditors
who are not assumed or paid off in cash by the APA
and then to Equity Interests - per the POR.
So I am inclined to agree with you that any
recovery for the Common Shareholders will be
paid in Holdco Stock or Bonds - per the POR.
I am presuming that the Common Shareholders
will definitely receive something because it is
stated in both the “ Order Approving the APA “
and an SEC filing that the Sale will benefit
the Shareholders.
However - I do not think that the SHLDQ shares
will be exchanged with new Holdco Shares
because Holdco is not a reorganization of Sears
and is its own Entity. I do think that the new
Holdco Common Shares will be distributed
according to the POR and the SHLDQ Shares
will continue to trade until either the Debtors
emerge from Bankruptcy as a newly
Reorganized Company with the remaining Assets
and Stores not sold off, or until the end of a
Liquidation Plan and all proceeds of the
Liquidation are paid out.
Sent from my iPad
AI
