if esl's bid is approved by the judge, following is how shc might be utilizing its cash while liquidating everything not included in the apa.
this is from docket 2344 and originally would have applied to a complete liquidation in the event esl's bid were not to be approved by shc as part of the auction process. am assuming, while it was not developed for a smaller universe of assets, the framework would be similar.
again, can not recall if esl has subsequently stepped in to mitigate any of these items.
at any rate, if esl's bid is approved by the judge, this may be the primary way in which the unsecureds will be paid.
(1) gross proceeds from GOB sales of merchandise inventory. as inventory is sold, expenses related to the inventory liquidation are deducted from proceeds, resulting in an assumed orderly liquidation inventory value to the estate of approximately 90%
(2) the first $240 MM of previously unencumbered sale proceeds realized (which are segregated into a separate account) after which previously unencumbered asset sale proceeds are used to repay the $350 MM junior DIP in full; after the junior DIP has been repaid in full, additional asset proceeds are used to pay administrative expenses and unsecured creditors.
(3) the imposition of a 4% charge on encumbered assets sold throughout the case pursuant to 506(c) of the BC, with the exception of the first lien and prepetition ABL collateral (including non-insider portions of the FILO and citi L/C), and junior DIP collarteral due to the 506(c) waivers granted to those lenders solely in their capacity as DIP lenders
(4) excess proceeds (proceeds above lien value) from sales of encumbered collateral.
footnote: prior to 1/14/2019, the company is assumed to operate in the ordinary course while transitioning from a 505 to a 425 store footprint
