linda,
i guess i mistook your comment about ..."eliminating the debts of certain senior creditors and the $3.5 b of uc's from ...holdco's balance sheet - after the closing" as somehow meaning they might have been on there.
we are on the same page about the effect of the 363(f) ruling. none of that debt would have ever had a chance of transferring to holdco i.e. holdco never would have had to assume any liability for those debts based on the ruling.
for some reason which i do not understand because i initially thought the extent of holdco store purchase was limited to the 425 stores, if you look at the language of the agreement, even though shc is conducting various gobs in a large number of stores, some of them which are evidently not part of the 425 store footprint will be handed over to holdco after the gobs are completed and the stores are "cleaned out".
one explaination for that confusion might be the language in the transcript of the auction hearing (i believe that's where i read it) which indicated that immediately upon closing that holdco would be selling around 100 dark properties with the thought it might net $100 million.
i also believe that others of those properties will be disposed of by shc and the proceeds, net of any secured liabilities against them, will be used by shc to pay various creditors, including the uc's.
and regarding your thought that this somehow could be classified as a merger if stock is exchanged, i have cut and pasted a number of comments from either judge drain's order or the apa which categorically states that in no way will any actions by holdco and shc be considered a merger.
M. No Successor or Other Derivative Liability. (from page 11 of drain’s order)
The sale and transfer of the Acquired Assets of the Debtors to the Buyer, including the assumption by the Debtors and assignment, transfer and/or sale to the Buyer of the Assigned Agreements, will not subject the Buyer or ESL to any liability (including any successor liability) under any laws, including any bulk-transfer laws, or any theory of successor or transferee liability, antitrust, environmental, product line, de facto merger or substantial continuity or similar theories, with respect to the operation of the Debtors’ business prior to the Closing
R. Satisfaction of Section 363(f) Standards. (from page 16 of drain’s order)
Except as expressly provided for in this Sale Order, the Debtors may sell the Acquired Assets that are owned by the Debtors free and clear of all …de facto merger claims…
22. (from pages 43 and 43 of drain’s order)
Except as expressly set forth herein or in the Asset Purchase Agreement, the Buyer Related Parties and their successors and assigns shall have no liability for any Claim against the Debtors or the Debtors’ estates or Excluded Liabilities, whether known or unknown as of the Closing Date, now existing or hereafter arising, whether fixed or contingent, whether derivatively, vicariously, as a transferee, successor, alter ego, or otherwise, of any kind, nature or character whatsoever, by reason of any theory of law or equity, including…any common law doctrine of de facto merger…
27. No Successor or Other Derivative Liability. (from page 52 of drain’s order)
By virtue of the Sale Transaction, the Buyer Related Parties and their affiliates, successors and assigns shall not be deemed or considered to: (i) be a legal successor, or otherwise be deemed a successor to any of the Debtors; (ii) have, de facto or otherwise, merged with or into any or all Debtors; (iii) be consolidated with the Debtors or their estates; or (iv) be an alter ego or a continuation or substantial continuation, or be 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, in each case by any law or equity, and the Buyer Related Parties have not assumed nor are they in any way responsible for any liability or obligation of the Debtors or the Debtors’ estates, except with respect to the Assumed Liabilities. Except as expressly set forth in the Asset Purchase Agreement, the Buyer and its affiliates, successors and assigns shall have no successor, transferee or vicarious liability of any kind or character, including, without limitation, under any theory of foreign, federal, state or local antitrust, environmental, successor, tax, ERISA, assignee or transferee liability, labor, product liability, employment, de facto merger…
“Competing Transaction” (from the definitions section of the apa on page 30/1120)
shall mean any direct or indirect financing, refinancing, acquisition, sale, divestiture (including by merger, acquisition or other business combination), public offering, recapitalization, business combination or reorganization, whether in one transaction or a series of related transactions, of or involving or implicating all or any material part of the Designation Rights, the Properties, the Leases, the Acquired Assets, the Assumed Liabilities or any Business (other than any such transaction or series of related transactions with Buyer or any Affiliate thereof) or any standalone plan of reorganization or liquidation for any Seller that does not contemplate the consummation of the Transactions
Section 9.2 Tax-Related Undertakings and Characterization of the Transaction. (from page 106/1120 of the apa)
my very layperson’s interpretation of this section is that if holdco elects to treat the various transactions anticipated as a result of this purchase as a tax reorganization then seller (shc) must do certain things at the direction of holdco. Among those things seem to be to cause certain subsidiaries (I believe advantageous to holdco’s tax plan) to merge sometime after the approval of the bankruptcy plan but before the closing. In addition to possibly having some subsidiaries merge, holdco may also direct that other subsidiaries be liquidated (I believe so as not to create any competing claim for nols or other tax advantages, presumably if they were left with shc) which also would be done at holdco’s direction after the bankruptcy plan is approved but before closing.
(a) Unless Buyer makes the election under Section 2.12(b) to treat all the transactions described in Article II as Designated Sale Transactions (resulting in no transfer of Sellers’ Tax attributes to Buyer): (1) Buyer shall provide to Sellers detailed instructions as to steps to take (or not take) in order to secure and preserve the qualification of any of the transactions set forth in this Agreement as a Tax Reorganization (except if and to the extent Buyer determines otherwise, in accordance with Section 2.12(b), in respect of a given transaction or a particular Seller) and to achieve the Tax Result, including, without limitation, with respect to (i) repayment, cancellation or settlement of, or other actions with respect to, intercompany accounts after the approval of the Bankruptcy Plan and on or before the Closing Date, (ii) the merger of any of Sellers’ Subsidiaries with another Sellers’ Subsidiaries after the approval of the Bankruptcy Plan and on or before the Closing Date or conversion of any of Sellers’ Subsidiaries into limited liability companies with effect after the approval of the Bankruptcy Plan and on or before the Closing Date, (iii) the filing of any Tax elections to treat any such Subsidiaries as disregarded entities for U.S. federal income tax purposes with effect after the approval of the Bankruptcy Plan and on or before the Closing Date or otherwise taking such action to establish that such Subsidiaries have liquidated for tax purposes after the approval of the Bankruptcy Plan and on or before the Closing Date, (iv) implementation of the Distribution Requirement in a manner that is consistent with section 507 of the Bankruptcy Code, (v) satisfaction of the ownership requirements set forth in section 382(l)(5)(A)(ii) of the Code…
