Thread regarding Sears layoffs

@vcf It was not just at 3am. The final auction negotiations took place earlier this week from some normal time Monday morning through 3am Wednesday before Sears and Eddie came to an agreement. They were going to give up at lunchtime Tuesday but Judge Drain refused to accept that result and told them to go back and keep trying not to liquidate.

Uncescured is unsecured. If anything Eddie’s loans kept the company afloat. They may sue but the burden of proof will be entirely different. This might get litigated for so,e time after the sale but it’s notmlikely anything will come of it.

UCC should have been expected to be left out of the auction process. The creditors still have to show harm, and they cannot. If Sears had held those properties, one of two things would have happened.

A. The creditors would never have been in a positon to extend the money to SHC, because SHC would have been gone by the time they did extend the loans.

B. They would not be getting any more recovery, because if they had been held, they would be near worthless now, along with the vast majority of the remaining properties.

The case cannot be made joint with the Canadians, as that is a different country with different laws.

@xfr

I would suggest you read up on it, because the crux of this is wether reasonable value was paid for the SRG properties. If it was, that ends it with no further action necessary or possible. As far as I can tell, Chesapeake never did declare BK, and the only references I can find to them and $5 bil is when they sold some oil fields. Nevertheless, if they did settle that does not create precedent. There must be a decision rendered by a judge outside of the trial court to create precedent. A settlement or a jury trial verdict do not create precedent from a legal standpoint.

My expectations are that the causes of action against ESL/Lampert will be for billions plus punitive, for everything the unsecureds are owed joined with everything the Canadians are seeking. Chesapeake and others have already established precedent for self dealing when it comes to spinoffs and not hedging the creditors, this is old hat in the oil industry. "So you gave the shareholders a cut? That's nice. That's not us."

Also of interest is where Bruce Berkowitz stands in all of this. He rejected 0.25 of par from Eddie, and of course he was just as complicit in all the SRG c-ap. He's potentially got the biggest axe to grind of them all.

Whoever smelt it dealt it.

3 a.m. negotiations, did anyone get a whiff of sulfur?

Devils in town.

The UCC was basically left out of the room entirely throughout the negotiation, and of course weren't there during the 3am. The agreement of course was struck between Eddie and the people and he hired. Plenty of appeals fodder, and of course the judge will allow argument, because judges reeealllly hate getting overruled by the appeals panel/higher courts. Drains own fault for letting Sears/Eddie run amok.

It's long been known in bankruptcy circles that this would only come up after Sears declared bankruptcy when actual damages occurred, and lo and behold, it has. People have been talking about fraudulent conveyance wrt Sears in academic circles since SRG was created when Chesapeake was fresh in their minds. SRG, ESL, and Eddie himself are all at risk here. I recommend you read up, because you're clearly not up to speed on any of this.

A. They should have filed this as an objection when Eddie’s bid was entered, not after it was accepted. The judge will probably kill in on those grounds.

B. “Less than reasonably equivalent value”? What are they smoking? SRG paid 2.7 billion and guaranteed below market rents for 6 months before they were allowed to begin kicking out Sears and Kmart stores. Those properties, had SHC held them, would be worth a fraction of that now. As for the liquidity arguments, those may have some merit, but if and only if PBGC is a party, and only in regards to PBGC. (They aren’t) The liquidity problem when the stores were sold to SRG related to payments to the pension plan and a need for cash to order holiday merch, not service debt to any other existing creditors. It is a big reason why Craftsman was sold to SBD and why a number of the remaining properties were “ring fenced” by PBGC. My understanding is that when Craftsman was sold, most of the proceeds went to the pension plan and PBGC removed the ring fencing, allowing Sears free reign for what to do with the properties. This was all after the SRG deal went through. These creditors are all also going to have a massive uphill climb in substantiating any of this and showing how they suffered harm, namely because most if not all of them extended the loans in question to SHC AFTER SRG was created. They knew what they were getting into. Also worth noting that in the case of the secured creditors, none of their loans were backed by the stores sold to SRG, effectively mooting their claims. As an aside, SHC shareholders sued ESL less than a month after the deal went through, using nearly the same arguments and claims. The case went nowhere and was eventually settled out of court IIRC.

The fact that they are depending almost entirely on docs held under seal to support this raises other questions, as does the timing. The biggest question the judge is going to want answered is why they waited this long. If they cannot give multiple, compelling reasons for it the judge is going to kill it for lack of timeliness. Along with all the other defects in their claims, only some of which are going to be curable (the biggest ones, to wit the timeframe and valuation claims), and the rest are not. That’s probably enough to kill this last ditch attempt to get Eddie, barring any unexpected actions by the judge. The long and short of this is that these creditors need to be really careful, because they just might get exactly what they want. Only problem is that if Sears is forced to liquidate at this point, it’s going to be mighty hard to find a liquidator and the creditors bringing this acton are going to take a major bath on it.

nothing will come of this