Sears Holdings Corp. (fka SHLDQ)

[56Chevy]

Chapter 11 Bankruptcy is expensive business for everyone involved...and the longer it takes the more it costs.

1) Aren't the unsecured creditors near the bottom of the list of persons asking for money from old Sears?

Yes and no...they actually fall in the middle. The Absolute Priority Rule follows that secured creditors must be paid first, next are the unsecured creditors (UC), and finally equity holders IF any assets remain.

2) If so, wouldn't they be expecting at least some monies from old Sears? Otherwise why would they be paying financial advisors (and I assume lawyers as well) significant amounts of money for their efforts?

That's just it..the unsecured creditors aren't paying them. They get to choose who will represent them but they are not on the hook to pay the fees. Professional fees built up by official creditor committees (both secured and unsecured AND equity committees when there is one which is rare) are paid by the estate. But the answer is YES they expected to be paid..and in full! The DIP had a total of $778 million cash on November 3, 2018 and by February 11, 2019 just 3 short months later there was $0.00 cash. Nobody expected oldSears to burn thru so much cash. The Unsecured Creditors lost the battle to have this case changed to a CH 7 liquidation months ago. They knew if they were going to get any recovery, even pennies on the dollar, their only hope was to have sears liquidated before Eddie could purchase the only assets worth anything to liquidate..they saw the handwritting on the wall but were unable to stop it. Now the lawyers for the unsecured creditors are gonna get stiffed by the estate. This why the case is deemed "administratively insolvent".
EL handled this about as bad as it could have been handled from day 1 and now ( at least in my mind) the only way out for him is to cough up more money...alot more money. The judge isn't happy..and if you're Eddie Lampert right now that ain't good.