Sears Holdings gets court approval for $5.2 billion sale of assets

By Caroline Salls

Pittsburgh, Feb. 8 – Sears Holdings Corp. obtained court approval to sell its assets to ESL Investments, Inc. for $5.2 billion, according to an order filed Friday with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the assets being purchased include Sears’ “go-forward stores.”

According to the order, ESL’s claims related to Sears’ ground lease term loan facility, first-in last-out facility, 2020 real estate loan, second-lien term loan, second-lien line-of-credit facility, second-lien PIK notes and Citi letter-of-credit facility will be allowed in amounts set in the purchase agreement.

Cyrus claims related to Sears’ final junior debtor-in-possession order, the Citi letter-of-credit facility, the second-lien PIK notes and the ground lease term loan facility will also be allowed in the company’s Chapter 11 cases.

All objections were overruled by the order.

Last month, the official committee of unsecured creditors appointed for Sears’ Chapter 11 case objected to the sale, arguing that the ESL bid is the result of a flawed process, fails to provide value for unencumbered assets by a dramatic margin and renders the debtors administratively insolvent.

According to the objection, the bid was also premised on an inappropriate credit bid of disputed claims, and releases causes of action worth hundreds of millions of dollars.

The purchase price is comprised of cash equal to $1.4 billion, plus up to $17 million for store cash, plus a $35 million credit bid release consideration, minus the total amount of a credit bid related to the outstanding obligations under a first-in last-out facility, plus the amount of a credit bid related to $433.45 million in second-lien obligations, plus any FILO facility buyout amount.

The purchase price also includes a credit bid related to an IP/ground-lease term loan facility, the first-in last-out facility, a 2020 real estate loan and the second-lien obligations, as well as debt or equity securities in the buyer in an amount and form to be determined, satisfaction of all junior debtor-in-possession term loan obligations, satisfaction of Citi letter-of-credit facility obligations and the assumption of seller liabilities.

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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