Sears Wins Liquidation Plan Approval as Lengthy Bankruptcy Nears End
07 Octubre 2019 - 8:02PM
Noticias Dow Jones
By Soma Biswas and Peg Brickley
Sears Holdings Corp. won court approval Monday of a chapter 11
liquidation plan requiring suppliers that kept its shelves stocked
in bankruptcy to wait for their money or take a discounted
payoff.
Judge Robert Drain of the U.S. Bankruptcy Court in White Plains,
N.Y., said he would sign off on a creditor repayment plan despite
the company's admission that it doesn't have the cash to pay
essential bills, including tens of millions of dollars owed to
companies that supplied goods while Sears tried to stay afloat
earlier this year.
The decision marks the "beginning of the end" of Sears's
bankruptcy case after nearly a year, said David Wander of Davidoff
Hutcher & Citron LLP, a lawyer for a number of Sears vendors
and creditors. The ruling is good news for all Sears creditors,
which can finally look forward to repayment at some point in the
future, Mr. Wander added.
Judge Drain said Monday that the Sears shell company left behind
after former Chairman Edward Lampert bought out the best stores is
projected to be short by $36.5 million to $104.5 million in
covering the payment obligations it needs to meet before exiting
bankruptcy. Under the liquidation plan, unsecured creditors will
recover 2.5 cents on the dollar.
The plan will become effective once money starts to flow into
the bankruptcy estate from potentially preferential payments that
went out the door before Sears filed for bankruptcy, Judge Drain
said. Sears's bankruptcy estate could rake in about $50 million
from those preference claims, Judge Drain said.
Cash is scarce in the bankruptcy case, with about $46 million
available for unsecured creditors, according to testimony during
the confirmation hearing that began earlier this week.
Acknowledging the company's dire financial straits, official
committees representing Sears creditors and retirees agreed to
support the bankruptcy plan, as did the Pension Benefit Guaranty
Corp., a quasigovernmental agency that absorbed unpaid pension
obligations.
Some Sears suppliers balked, objecting to what they saw as
favorable treatment for lawyers and advisers to the company who
already earned $150 million as of Feb. 11, when a majority of Sears
stores were sold off. The professionals have claimed another $50
million in fees since then, according to unhappy vendors. Judge
Drain said the collection of that $50 million should be
deferred.
Another source of recovery for Sears's unsecured creditors is a
lawsuit funded with $25 million against Mr. Lampert, his hedge fund
ESL Investments Inc. and others for deals that allegedly drained
billions of dollars of assets from Sears.
A group of foreign vendors that aren't being paid under the plan
are likely to continue litigating against the Sears bankruptcy
estate.
"Right now the foreign vendors aren't getting anything because
[Sears is] objecting to their claims," Mr. Wander said.
Foreign vendors have been locked in a dispute with the company
since last year over whether their claims for goods shipped within
20 days before Sears filed for bankruptcy should be treated as
administrative expenses and given top payment priority.
The new company running hundreds of stores salvaged by Mr.
Lampert is already closing locations and liquidating inventory,
while it fights the bankruptcy estate over the terms of their
agreement.
Most of Mr. Lampert's acquisition came in the form of debt
forgiveness after he spent years lending money to Sears.
Investment funds that bought Sears claims at discounted prices
also agreed to support the plan, which allows them to get 75% of
what they are owed quickly, as long as they sign away the rest.
Write to Soma Biswas at soma.biswas@wsj.com and Peg Brickley at
peg.brickley@wsj.com
(END) Dow Jones Newswires
October 07, 2019 20:47 ET (00:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Sears (CE) (USOTC:SHLDQ)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Sears (CE) (USOTC:SHLDQ)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024