actually, while page 747 might be considered proof of stockholders surviving, what actually took place would have had to be the example shown.
that's not what happened. page 748, while also labeled as one potential example of things which "might" happen, in fact is what in actuality did happen.
remember, this docket was filed a week before transform holdco's bid was approved by judge drain. so while it presented a number of possibilities, the only controlling one is the one which actually took place which is the example shown on page 748.
_______________________________________________________________
language from page 748:
Potential 363 Sales as Tax Reorganizations
-
A BC Section 363 sale of a corporate debtor's assets for a mix of acquirer stock and other consideration can potentially qualify (in whole or in part) for tax reorganization treatment. To the extent it does, an acquiror may be able to achieve similar tax results as those described above under a Chapter 11 plan.
- To qualify for tax reorganization treatment -
• The sale of assets and subsequent distribution to editors/shareholders of the sale proceeds must be pursuant to a single plan and arrangement for tax purposes.
- The sales agreement would constitute such plan (and would so provide) and generally would require that the "liquidation" of the seller corporation be completed from a tax perspective within a specified period (whether under a Chapter 11 plan or otherwise).
• In addition, qualification as a tax reorganization depends on the composition of the ultimate distribution of consideration to creditors/shareholders under the plan (stock vs. non-stock), as
well as the satisfaction of certain other requirements.
• Whether these various requirements could be satisfied depends on the facts and circumstances of the particular transaction, and becomes more complex in a multi-tier structure (as we have
here).
- As previously indicated, however, there potentially could be significant tax costs not present in a
Chapter 11 restructuring of the existing group.
____________________________________________________________
compare the above to judge drain's order.
judge drain approved the transaction among shc and it various subsidiary debtors and transform holdco as a 363 asset tax reorganization sale.
when it says the sale must include acquirer stock and other consideration it did. the acquirer, transform holdco, provided 3000 shares of transform holdco class b securities in addition to other consideration which in the aggregate totaled $5.2 billion.
when it says "the sale of assets and subsequent distribution to ceditors/shareholders of the sale proceeds must be pursuant to a single plan and arrangement for tax purposes". this is also what happened as evidenced by judge drain's order. lampert was both a creditor as well as a shareholder. he is also the 100% owner of transform holdco. so, when transform holdco purchased the assets the requirement that there had to be a majority creditor/shareholder in the old company who was also a majority creditor/shareholder in the new company was satisfied.
when it says "The sales agreement would constitute such plan (and would so provide) and generally would require that the "liquidation" of the seller corporation be completed from a tax perspective within a specified period (whether under a Chapter 11 plan or otherwise)" this was also provided in judge drain's order. the asset purchase agreement was designated an approved plan of reorganization and the asset purchase agreement also provided that the "seller corporation" (shc and it debtor subsidiaries) would liquidate within 3 years of the closing of the sale. so that means that shc and its debtor subsidiaries will have to wind down and liquidate within three years from february 11, 2019 (the Closing Date).
when it says "In addition, qualification as a tax reorganization depends on the composition of the ultimate distribution of consideration to creditors/shareholders under the plan (stock vs. non-stock), as
well as the satisfaction of certain other requirements", this was also addressed in judge drain's order.
the composition of the ultimate distribution as it relates to "stock" would be the distribution of the 3000 shares of class b holdco stock which will be distributed back to lampert as a result of his position as a superpriority creditor. that means that the stock lampert gave to old sears as securities consideration will just come back to him.
so, all in all, i still am of the belief that holders of shldq will be eliminated, cancelled, and wiped out with no further consideration.
page 747 is one possibility of what could have happened but it did not happen so therefore that example does not control in this situation.
