Sears unsecured creditors committee objects to amended disclosure

By Sarah Lizee

Olympia, Wash., May 22 – The official committee of unsecured creditors for Sears Holdings Corp.’s Chapter 11 case objected to the company’s amended disclosure statement, according to an objection filed Wednesday with the U.S. Bankruptcy Court for the Southern District of New York.

“As is apparent from the terms of the amended plan, the debtors continue to proceed with blind focus toward confirmation of a Chapter 11 plan without regard for whether their desired outcome is in the best interests of creditors or even feasible,” the committee said in its objection.

The committee said the debtors seek approval of a disclosure statement for a plan of liquidation that proposes “substantive consolidation of the debtors’ estates without satisfying the applicable legal standards and otherwise inflicts significant harm on certain creditors.”

The disclosure also fails to pay all administrative creditors in full on the effective date under either the substantive consolidation settlement or the deconsolidated scenario, the committee added.

The objection also said that the disclosure evidences a lack of good faith by unfairly prejudicing the rights of third-party unsecured creditors, provides unjustified releases to non-debtor parties for no consideration, and results in disparate treatment to unsecured creditors through the Pension Benefit Guaranty Corp. settlement.

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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