"Separately, the Pension Benefit Guaranty Corporation’s (“PBGC”) Objection (the
“PBGC Objection”) is based on a misunderstanding (or misstatement) of the terms of the
Proposed Sale and should be rejected.6
The Adequate Assurance Objections, some of whichhave already been resolved, raise issues that have been addressed or can be addressed at a later
time (if indeed they ever arise) and should not stand in the way of the Proposed Sale. Finally,
virtually all Cure Cost Objections have been adjourned and those not adjourned can be resolved
through the cure reserve mechanic. "
"IV. The PBGC’s Objections Are Without Merit
123. Misreading the APA, the PBGC wrongly concludes that the Proposed Sale would
result in a “free and clear” sale of certain assets (the KCD notes) from Sears Re to ESL. Basedon this misunderstanding, the PBGC argues that the Proposed Sale should not be approved.37 Its
objection is groundless and should be rejected.
124. ESL does not dispute that section 363’s “free and clear” sale provision only
applies to property of the Debtors’ estates. 11 U.S.C. §§ 363(b)(1), (f). Sears Re, the entity that
owns the KCD Notes, is a non-debtor whose property does not form part of the debtor’s estate;
there is no question that ESL therefore cannot purchase the KCD Notes “free and clear” in a
section 363 sale. Accordingly, the Amended Proposed Sale Order is not intended to cover the
purchase of the KCD Notes—it only applies to property that is part of the Debtors’ estate.
Amended Proposed Sale Order, Dkt. No. 1730, Ex. B, ¶ F. Furthermore, the Amended Proposed
Sale Order explicitly only provides for “free and clear” sales of property in the Debtors’ estates.
Id. ¶¶ P, S. The APA also provides that Sears Re will be the seller of the KCD Notes. APA §
2.1(r). In short, the express terms of the APA and of the Amended Proposed Sale Order
demonstrate that ESL is not attempting to make a “free and clear” purchase of the KCD Notes."
