Replies to post #32962 on Sears Holdings Corp. (fka SHLDQ)

[thelionwarrior]

"Further, the holding entity can loan money to the operating company to buy other business assets, but it should secure the collateral for the mortgage with liens that run to the holding company. Again, the assets are secured because the holding company is a priority lien holder, and vulnerable cash is taken out of the operating company through loan repayment.
When properly structured, the multiple-entity approach is successful because it seeks to maximize wealth within the entity with no liability issues, and minimize assets with the entity taking all the risks. And because the holding company itself, and not its owners, creates and funds the operating company, the holding company is liable for the operating company's debts, but only up to the amount it has invested, if it is in a business form that offers limited liability, such as the limited liability company (LLC)."

[justthefactsmam]

thank you for posting such an informative article which clearly demonstrates why shldq shareholders will not be saved by transform holdco. what's your agenda? on the one hand you seem to be cheer leading the stock while on the other hand you re-post an article which clearly has nothing to do with the shc/transform holdco transaction while pretending it does. are you really short this stock?

this doesn't have any relationship to what has happened among shc and its subsidiaries and transform holdco.

first of all, transform holdco purchased substantially all of the "go-forward" assets of the selling company. your example states the only real asset purchased was receivables.

second, there is no continuing business relationship between transform holdco and shc and its subsidiaries.

this is NOT a situation in which transform holdco is the "holding company" and shc and its subsidiaries are the "operating companies". the benefits of the nols and tax credits will be realized over a number of years while the asset purchase agreement establishes that shc and its subsidiaries will be wound down and liquidated within three taxable years after the closing date of february 11, 2019.

shc and its subsidiaries which are still trading on the otc under the symbol "shldq" are divorced from transform holdco.

third, the nature of the 363(f) sale to transform holdco is the transaction which insulated transform holdco from any of liabilities of shc and its subsidiaries. look at the caption on the order from judge drain approving the sale.

transform holdco has already stated that while it is a private company owned 100% by lampert, it might in the future go public. in the event transform holdco issues stock in transform holdco entity, this securitization would have nothing to do with shc, its subsidiaries, or shldq stock.

think it is important to remember that lampert has stated he intends to do things with the assets he purchased which shareholders would find distasteful. that would indicate he has no immediate intentions of securitizing the assets he purchased from shc and its subsidiaries.

so once again, thank you. i hope the board will read and understand the implications of the article you posted twice!

[rc1968]

Holding and operating companies

While what you posted is all good information on how this structure is beneficial I think you feel that this is what Eddie will do with Transform Holdco. And he might very well do that. So the simple way is to create a new holding company which offers shares to the public which purchases the receivables from Transform Holdco and does as you outlined.

Where I feel you have gone wrong here is assuming that he would use SHLDQ for this purpose. There is no benefit to that just huge downsides. Its much easier and cheaper to just create a new public company for it (or do it with some other less toxic shell). You raise new capital and you don't have any of the baggage of an existing shell. This may speak to his comments of it going public again sometime in the future. I don't see this happening anytime soon, they have enough other stuff to deal with right now. Don't get caught up with the thoughts of well they were related companies/owners in the past and so will do things together going forward. Take that out completely, its an emotional thing and not relevant. (and they don't appear to be friendly at this point either)

I am sure there are many options for him but he is only going to do the one that is best for him. There may be 3 or 4 ways to do something but you pick the best one.

Gut feel based on your posts is that you have come up with a scenario that you feel benefits the SHLDQ shareholders that is plausible. The problem I feel is that maybe you have taken some of the things like the operating/holding company scenario and not seen the easier way to do it that in the end doesn't benefit SHLDQ. Trust me, I have made this mistake too many times to count, you get blind and entrenched in what you believe no one else sees or gets. Its not a dig at you but just something I have personally done too. So one question I try to ask is that same outcome doable in some other easier manner that is less costly and less risky. If so then take that into account.