Replies to post #17479 on Sears Holdings Corp. (fka SHLDQ)

[justthefactsmam]

linda,

if the transform holdco deal is approved, i'm not exactly sure what assets would be left for shc around which they might reorganize to utilixr any of the nol benefits.

there don't seem to be any real assets left. after liquidating the closed stores and utilizing that money to pay ongoing bills, what's left?

i guess they could leave a corporate shell with nol's as their surviving asset and then try to sell that.

under that scenario, guess they could merge with holdco but as of now, understanding that is beyond me although it does present an interesting option.

for the nol's to survive, my understanding is the company acquiring the nol's has to operate in substantially the same arena as that which gave rise to the nol's in the first place.

think my brain was a little fried when i first thought shc had missed the deadline for requesting an exclusivity extension for filing a por. was thinking it was a 3 month time period instead of a 4 month period.

at any rate, from reading that doc, it doesn't seem like much, if any, progress has been made to draft a por.

[Large Green]

linda1, you mentioned WMIH now COOP after the name change in the year 2018. Also, this is the exact same law firm that WMIH/COOP used all of these years by the name of Weil, Gotschal, and Manges.

Yes WMIH/COOP had almost 6 billion in NOLs or tax attributes to use and the commons of WMIH were saved from being zeroed out and then they moved on to purchase several other companies so far utilizing the Net Operating Losses or NOLs.

I expect almost a carbon copy replay IN PRINCIPLE that was used in WMIH/COOP to now be used in SHLDQ BUT commons must be saved in order to maximize the tax attributes just as they did in WMIH/COOP.

[Emptyhead]

If so, this is not good for current holders of SHLDQ shares. The dilution effect will be absolutely horrendous on the current SHLDQ price. WAMUQ Shareholders got fleeced !!

[justthefactsmam]

linda,

regarding the nol's, pages 77-86 of docket 2339 discuss various scenarios under which some, all, or none of the nol's could be utilized.

one on which i would initially like to focus is the loss of some nol's in the event of "cod", cancellation of debt.

as i quoted from the transcript of the auction, it was contemplated that in return for cancellation of esl's $1.3 billion in debt, esl would receive shares in holdco/newco or whatever it is/will be called before a formal renaming. that seems to be a cancellation which would reduce nol's.

i really would like to re-read these pages (78-86) a few more times before venturing what would still be a pretty much uninformed opinion, but there are a lot of permutations discussed in those pages which i do not fully understand. as you can see from reading those pages, even their accounting firm, deloitte, had only been working on that issue for about 3 weeks and docket 2339 begged off on "knowing" how any of this might eventually shake out.

of course, it ALL depends on whether or not the judge approves esl's bid.

also notice on pages 77 and 79 there are $900 million in tax CREDITS most of which are foreign tax credits. although esl's apa included some foreign assets, not sure how these might be utilized if they were to pass to esl/transform holdco.

there was also a discussion within these pages that in the event the $4 billion or so of secured debts were cancelled, that could/would reduce the nol's from $5 billion to $1 billion, but apparently still leaving the $900 million in foreign tax credits.

lastly on this point, if shc were to retain the nols, then shc must retain "more than an insignificant active trade or business". that's from page 86 of docket 2339.

there seem to be so many "what ifs" that are still being fleshed out by the tax accounts and tax lawyers we are left best guessing at this time.

that doesn't mean there is not enough information to draw some informed speculation.

important to note that esl's apa did make a comment they wanted the sale to be considered as a tax reorganization, which if possible, bodes well for shareholders.