finished going through the transcript and exhibits to the auction sale.
of note was a comment that sears had specifically picked this particular venue to file for bankruptcy because of the court's favorable treatment of workers. certainly seems the argument of keeping 45k jobs might loom large.
additionally, after seeing all of the coverage of federal workers on furlough and not being paid standing in food lines and worrying about losing their homes, it would be a difficult decision to rule for liquidation and throw them out of work at this time.
esl did step up in its final offer to guarantee some 40k+ jobs through sears fiscal 2020 which ends january 31, 2020. so if the judge approves, those workers will have at least 1 year of guaranteed benefits which i believe would include severance.
in my post 17653 i laid out the major concerns raised by the committee of unsecured creditors. below are the changes esl made to its bid which were those final changes leading to shc agreeing to make esl's offer an approved bid.
(1) esl agreed to assume the entirety of the $350 MM junior dip which will be rolled over into newco
(2) newco to pay $19 MM in transfer taxes
(3) newco to assume $4 MM in mechanics liens
(4) newco to purchase the cash and store registers estimated at $17 MM
(5) debtors to retain $13 MM in hurricane insurance proceeds
(6) newco to acquire proceeds of ship sale to service.com
(7) $35 MM payment at closing, esl permitted to credit bid all of its debt claims that would be allowed and no collateral attack on any conversion of debt into newco equity or any transaction approved by the court. THIS POINT GOES BACK TO AN EARLIER POST I HAD MADE IN WHICH IT WAS SPECIFICALLY DISCUSSED THAT ESL'S DEBT CANCELLATION WOULD BE CONVERTED INTO NEWCO STOCK. THIS IS THE FIRST AND ONLY MENTION OF NEWCO STOCK THAT I HAVE SEEN OTHER THAN PART OF NEWCO'S CONSIDERATION TO DEBTORS WOULD BE NEWCO COMMON STOCK AND WARRANTS.
(8) esl would retain deficiency in 507(b) claims subject to the following limitations: (i) esl to waive recovery on account of 507(b) claims and deficiency claims related to seritage, lands end or other transactions involving intentional misconduct by esl, (ii) esl recovery on account of 507(b) claims capped at $50 MM and any other recovery beyond $50 MM would be shared pro rata with unsecured claims and (iii) esl would not use any 507(b) claim to block any confirmation of any plan by sears.
shc approved the above changes and approved esl's bid as a confirmed bid. they closed by saying "in making our decision, we did take into account the court's direction at the chambers conference today (1/19/19) and trying to come up with a solution where the debtors could attempt to maximize value, preserve thousands of jobs, and also eliminate risk of administrative insolvency where possible."
the judge did warn sears there was still risk of administrative insolvency and that financial burden would fall on sears for anything beyond what esl had agreed to absorb.
lawyers for the unsecured creditors objected to the approval of esl's bid.
so, this is what will be discussed this coming week. so much has been filed i can't see any way this will not carry over into wednesday.
