Sears files Chapter 11 plan detailing winddown of remaining assets

By Caroline Salls

Pittsburgh, April 18 – Sears Holdings Corp. filed a Chapter 11 plan and related disclosure statement Wednesday with the U.S. Bankruptcy Court for the Southern District of New York.

Sears said the plan calls for a winddown of the remaining assets of its estates, consisting primarily of litigation claims.

The plan also provides for the approval of a settlement with the Pension Benefit Guaranty Corp.

On the plan effective date, all of Sears’ assets will be transferred to a liquidating trust and the debtor legal entities will be dissolved. The trust and a board of directors will be appointed to carry out the plan.

Administrative expense claims and priority claims will be satisfied in full using winddown and asset sale proceeds.

Other secured claims will be satisfied in full using the proceeds from applicable collateral.

The PBGC will receive a beneficial interest in the liquidating trust, entitling it to the first $80 million of net proceeds of specified causes of action after payment in full of priority claims. The PBGC will also share in general unsecured claim recoveries.

Holders of general unsecured claims will receive net proceeds from general assets and the proceeds of the winddown account, in both cases subject to the satisfaction of senior claims.

Holders of ESL unsecured claims will receive a share of net proceeds from general assets after satisfaction of senior claims.

Sears is a retailer based in Hoffman Estates, Ill. The company filed bankruptcy on Oct. 15, 2018 under Chapter 11 case number 18-23538.

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