Court approves Sears Holdings creditor repayment plan
The part of Sears that was left after ex-CEO Eddie Lampert won a bankruptcy auction earlier in the year, has had a liquidation plan approved by a judge.
The plan reportedly allows for suppliers and creditors that kept product on the shelves during the bankruptcy, to either wait for their money or take a discounted payment, according to the Wall Street Journal.
Lampert won the auction in February for $5.2 billion dollars, saving 425 stores and 45,000 jobs.
David Wander of Davidoff Hutcher & Citron LLP, a lawyer for a number of Sears vendors and creditors, called the approval of the liquidation plan good news for all Sears creditors.
Transform Holdco LLC, the firm owned by Lampert’s hedge fund, now owns the business and operations of Sears and Kmart.
However, Sears went from operating more than 2,300 stores at its peak in 2006 — this figure includes Kmart stores, which Lampert merged with Sears in 2005 – to its current totals.
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It is a far cry from the day where Sears was as American as apple pie and baseball. It was founded shortly after the Civil War – knowns as Sears, Roebuck & Company – and was built up as a catalog business that sold Americans everything from the latest dresses to toys to tools. It boasted “name” brands like Craftsman and Kenmore. Craftsman was sold to Black and Decker in 2017 for about $900 million and is now sold at Lowe’s stores.
According to the judge, the Sears shell company left behind after 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.
Official committees representing Sears creditors and retirees agreed to support the bankruptcy plan, as did the Pension Benefit Guaranty Corp., a quasi-government agency that oversees unpaid pension obligations.
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Not part of this decision are foreign vendors that aren't being paid under the plan. These vendors are likely to continue litigating against the Sears bankruptcy estate.