Sears Bankruptcy

[pfaustus]

I’ve seen several references to people not knowing the status of Craftsman warrantees post-bankruptcy and other questions about the Sears Chapter 11 filing. I happen to be a bankruptcy lawyer when I'm not haunting flea markets for antique tools. So, here is the source for what is actually happening in the bankruptcy.

First off. It is a reorganization, not a liquidation. Sears intends to come out of it in some form. They may not pull it off, but assuming the company is dead is just as likely to ... Well you know what happens when you assume.

Second. Sears has retained a claims agent. Among other things, they are maintaining copies of the docket, the first day orders, and various press releases. You can view all the pleadings for free by clicking on “docket” here:

https://restructuring.primeclerk.com/sears/Home-Index

Third. Sears sought and received authorization to honor all warrantees and customer incentive programs on the first day. See documents 16 and 135 on the docket. The links are to the PDFs.

https://restructuring.primeclerk.com/sears/Home-DownloadPDF?id1=MTA5NDQx&id2=0

https://restructuring.primeclerk.com/sears/Home-DownloadPDF?id1=MTA5OTcw&id2=0

 

[Eric29]

Great information. Thanks!

 

[Jazzman442]

Thank you for posting this valuable information.

 

[shanny19]

Holy ****, a Sears thread that isn’t redundant. Thanks!

 

[L5wolvesf]

Excellent post - thank you.

 

[PFSard]

Just out of curiosity. In the reorganization scenario, what happens with the Sears employees' pensions?

 

[Finance Guy]

First off. It is a reorganization, not a liquidation. Sears intends to come out of it in some form. They may not pull it off, but assuming the company is dead is just as likely to ... Well you know what happens when you assume.

I didn't think they had a DIP in place?

 

[d.mcfarland]

Just out of curiosity. In the reorganization scenario, what happens with the Sears employees' pensions?

Eddie could probably care less about anyone but himself. Don't count on anything good coming from the bankruptcy except him making sure that his hedge fund gets their money back.

 

[xin]

They make money in this situation NONE of these people do anything unless they are making money.

 

[pfaustus]

I didn't think they had a DIP in place?

One of the First Day Motions was for approval of DIP financing from a group of pre-petition lenders. Buried in the motion or one of the Declarations would be a list of which ones (I didn't read them), which probably includes Lambert's hedge fund.

 

[dacan23]

They have an almost $2B underfunded pension liability. Dont know the laws in its priority, but its probably behind some creditors. Likely they will get screwed.

The only reason this dummy Lampert is trying to extend its death is to fleece the company even more. No one but him thinks they shouldnt kill and liquidate the company now.

Just out of curiosity. In the reorganization scenario, what happens with the Sears employees' pensions?

 

[pfaustus]

Just out of curiosity. In the reorganization scenario, what happens with the Sears employees' pensions?

The lawyers from the Pension Guaranty Board filed the very first appearances, so they are involved. Google produced this https://www.pbgc.gov/news/press/releases/pbgc-statement-on-sears-bankruptcy-filing.

 

[Finance Guy]

The only reason this dummy Lampert is trying to extend its death is to fleece the company even more.

Can we please dispense with such mythology? Eddie Lampert is an absolute legend at GJ!

 

[Finance Guy]

Buried in the motion or one of the Declarations would be a list of which ones (I didn't read them), which probably includes Lambert's hedge fund.

It looks like ESL did not participate in the primary DIP, but is trying to cobble together a junior DIP.

 

[Stuart in MN]

Holy ****, a Sears thread that isn’t redundant. Thanks!

It's also nice to see a post on the topic that isn't all innuendo and speculation.

 

[zendriver]

Just out of curiosity. In the reorganization scenario, what happens with the Sears employees' pensions?

Surprise! We get to pay.

The company’s long-term pension obligations, which have been underfunded by more than $1 billion for years, would be covered by the federal Pension Benefit Guaranty Corp., which has footed the bill for nearly 5,000 failed employer pension plans since its founding in 1974.

https://www.forbes.com/sites/ebauer...-pbgcs-debt-and-your-retirement/#a8bbcf12fb39

 

[xin]

Surprise! We get to pay.





https://www.forbes.com/sites/ebauer...-pbgcs-debt-and-your-retirement/#a8bbcf12fb39

Look where their headquarters is (of course they will let the TAX payers pick up the tab)...

 

[Finance Guy]

Look where their headquarters is (of course they will let the TAX payers pick up the tab)...

The PBGC is privately funded, but would likely be backstopped by the federal government.

 

[jdlong]

The reorganization plan should include breast implants for the cashiers. Works for Harbor Freight.

 

[kjdhawkhill]

Just out of curiosity. In the reorganization scenario, what happens with the Sears employees' pensions?

***Not a lawyer, but I used to work for a corporate restructuring firm as a binder monkey****

Typically employees/retirees will file to be recognized as creditors. Then, in layman’s terms, some ugly sausage-making negotiations happen. Employees/retirees might lose a lot, or virtually nothing. There are all sorts of competing interests, trying to be made “most whole” in a restructuring. Some are protected by statute, case-law, or strong contract, others, not so much.

The company/debtor tries to set the terms of restructuring, but all (major) creditors get to say their piece and hope the judge gives them 99% of what they’re owed and the rest of the debtors just a little less.

I don’t know how many employees/retirees were/are part of a defined benefit vs defined contribution plan and how many would benefit from the obscure Pension Benefit Guarantee Corporation (Insurance for pensions, run by the G). Seems like Sears turns over employees often enough that this might not be a huge liability for the company.

This is where a strong collective representation (union or otherwise) might be valuable for the long term career employees.




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[kythri]

Surprise! We get to pay.

Did you miss this part?

PBGC receives no taxpayer dollars. Its operations are financed by insurance premiums, investment income, and, for the single-employer program, assets and recoveries from failed single-employer plans.

 

[theoldwizard1]

Regarding Craftsman and Sears

Sears is just one of several different seller of Craftsman products. I know for a fact that ACE hardware will happily warranty any item that they regularly stock.

The real question is, what about Craftsman tools that SBD has chosen to not produce, like a lot of the garden tools (shovels, rakes, hoes, etc ?) as well as the ubiquitous Craftsman black rubber hose !

 

[Finance Guy]

The real question is, what about Craftsman tools that SBD has chosen to not produce, like a lot of the garden tools (shovels, rakes, hoes, etc ?)

SBD Craftsman is offering gardening tools ... sourced from Ames.

 

[Richard Cranium]

There is a lot of Sears and K-mart retires out there. I being one of them. I have not gotten any thing in writing from them yet.