DOCSLIB.ORG

Sear's Bankruptcy: from Roebuck to No Bucks

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Sear's Bankruptcy: from Roebuck to No Bucks University of Tennessee, Knoxville TRACE: Tennessee Research and Creative Exchange Chapter 11 Bankruptcy Case Studies College of Law Student Work 2019 Sear's Bankruptcy: From Roebuck to No Bucks Drew Hove Taylor Smith Bei Yang Follow this and additional works at: https://trace.tennessee.edu/utk_studlawbankruptcy Recommended Citation Hove, Drew; Smith, Taylor; and Yang, Bei, "Sear's Bankruptcy: From Roebuck to No Bucks" (2019). Chapter 11 Bankruptcy Case Studies. https://trace.tennessee.edu/utk_studlawbankruptcy/57 This Article is brought to you for free and open access by the College of Law Student Work at TRACE: Tennessee Research and Creative Exchange. It has been accepted for inclusion in Chapter 11 Bankruptcy Case Studies by an authorized administrator of TRACE: Tennessee Research and Creative Exchange. For more information, please contact [email protected]. SEARS’S BANKRUPTCY: FROM ROEBUCK TO NO BUCKS Photo: Mike Segar – Reuters BY: DREW HOVE, TAYLOR SMITH & BEI YANG THE UNIVERSITY OF TENNESSEE COLLEGE OF LAW TABLE OF CONTENTS TABLE OF CONTENTS .................................................................................................................................................... 2 CAST OF PLAYERS ....................................................................................................................................................... 5 I. INTRODUCTION .................................................................................................................................................... 7 II. BACKGROUND.................................................................................................................................................... 8 A. FOUNDING .............................................................................................................................................................. 8 B. EXPANSION .............................................................................................................................................................. 9 C. TURN OF THE CENTURY: THE 2000S...................................................................................................................... 10 III. WHAT LED TO CHAPTER 11 .......................................................................................................................... 12 A. PREPETITION CORPORATE STRUCTURE ................................................................................................................. 12 B. WHY THE DECLINING REVENUES? ........................................................................................................................ 14 C. CASH FLOW AND LIQUIDITY ISSUES ...................................................................................................................... 17 D. PREPETITION CAPITAL STRUCTURE ...................................................................................................................... 19 E. LIST OF CREDITORS HOLDING THE 20 LARGEST UNSECURED CLAIMS ................................................................. 24 F. LIST OF CREDITORS HOLDING THE 5 LARGEST SECURED CLAIMS ........................................................................ 27 IV. FIRST DAY MOTIONS ....................................................................................................................................... 29 A. MOTIONS AND ORDERS THAT FACILITATE ADMINISTRATION OF THE ESTATE........................................................ 30 1. VOLUNTARY PETITIONS & MOTION FOR JOINT ADMINISTRATION OF CHAPTER 11 CASES.................................... 30 2. CASE MANAGEMENT PROCEDURES ....................................................................................................................... 31 3. MOTION FOR EXTENDING TIME TO FILE SCHEDULES & STATEMENTS .................................................................. 32 4. MOTION FOR ORDER WAIVING REQUIREMENTS REGARDING EQUITY HOLDERS ................................................... 33 5. CASH MANAGEMENT MOTION ............................................................................................................................... 35 B. ORDERS THAT SMOOTH DAY-TO-DAY OPERATIONS .............................................................................................. 37 1. WAGES & BENEFITS MOTION ................................................................................................................................ 37 2. TAXES & FEES MOTION ........................................................................................................................................ 39 3. THE INSURANCE MOTION ...................................................................................................................................... 39 C. SUBSTANTIVE MOTIONS ......................................................................................................................................... 40 1. CRITICAL VENDORS MOTION ................................................................................................................................ 40 2. LIENHOLDERS’ MOTION ........................................................................................................................................ 45 3. CUSTOMER PROGRAMS MOTION ........................................................................................................................... 48 4. TRUST FUNDS MOTION ......................................................................................................................................... 49 5. CONSOLIDATED NET OPERATING LOSS CARRYFORWARDS MOTION ..................................................................... 49 6. THE STORE CLOSING PROCEDURES MOTION ........................................................................................................ 52 7. THE LEASE REJECTION PROCEDURES MOTION ..................................................................................................... 54 8. THE OMNIBUS LEASE REJECTION MOTION ........................................................................................................... 55 2 V. APPLICATIONS FOR EMPLOYMENT.................................................................................................................... 58 VI. CREDITORS COMMITTEE.................................................................................................................................. 59 VII. DIP FINANCING ............................................................................................................................................... 60 A. THE DIP ASSET BASED LENDING FACILITY .......................................................................................................... 61 1. 364(C) ................................................................................................................................................................... 61 2. 364(D) .................................................................................................................................................................. 63 B. ROLL UP ................................................................................................................................................................ 65 C. CARVE OUT ........................................................................................................................................................... 66 D. JUNIOR DIP FINANCING ....................................................................................................................................... 67 E. OBJECTIONS TO SEARS’S DIP MOTION ................................................................................................................. 68 F. FIRST INTERIM ORDER .......................................................................................................................................... 70 G. INTERIM JUNIOR DIP ORDER ............................................................................................................................... 71 H. FINAL DIP ABL FACILITY ORDER ........................................................................................................................ 72 I. FINAL JUNIOR DIP ORDER .................................................................................................................................... 74 VIII. THE 363 SALE ................................................................................................................................................ 74 A. SEARS HOME IMPROVEMENT BUSINESS SALE ........................................................................................................ 75 1. OBJECTIONS .......................................................................................................................................................... 76 2. SEAR’S RESPONSE ................................................................................................................................................. 78 3. ORDERS ................................................................................................................................................................. 79 4. FAILURE OF THE SHIP TRANSACTION ................................................................................................................... 79 5. DISPUTE & RESOLUTION ......................................................................................................................................
Load more

Recommended publications
  • United States Securities and Exchange Commission Washington, D.C
    UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 20)* AutoNation, Inc. (Name of Issuer) Common Stock, Par Value $0.01 (Title of Class of Securities) 05329W102 (CUSIP Number) Jenny Zhou, Esq. 2365 Carillon Point Kirkland, WA 98033 (425) 889-7900 (Name, Address and Telephone Number of Persons Authorized to Receive Notices and Communications) February 16, 2021 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.o Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
    [Show full text]
  • FORM 4 OMB Number: 3235-0287 Washington, D.C
    OMB APPROVAL UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 4 OMB Number: 3235-0287 Washington, D.C. 20549 Estimated average burden [ ] Check this box if no longer hours per response... 0.5 subject to Section 16. Form 4 or STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF Form 5 obligations may SECURITIES continue. See Instruction 1(b). Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934 or Section 30(h) of the Investment Company Act of 1940 1. Name and Address of Reporting Person * 2. Issuer Name and Ticker or Trading Symbol 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) CASCADE INVESTMENT, L.L.C. AUTONATION, INC. [ AN ] _____ Director __X__ 10% Owner (Last) (First) (Middle) 3. Date of Earliest Transaction (MM/DD/YYYY) _____ Officer (give title below) _____ Other (specify below) 2365 CARILLON POINT 5/3/2021 (Street) 4. If Amendment, Date Original Filed (MM/DD/YYYY) 6. Individual or Joint/Group Filing (Check Applicable Line) KIRKLAND, WA 98033 ___ Form filed by One Reporting Person _ X _ Form filed by More than One Reporting Person (City) (State) (Zip) Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned 1.Title of Security 2. Trans. Date 2A. Deemed 3. Trans. Code 4. Securities Acquired (A) 5. Amount of Securities Beneficially Owned 6. 7. Nature (Instr. 3) Execution (Instr. 8) or Disposed of (D) Following Reported Transaction(s) Ownership of Indirect Date, if any (Instr. 3, 4 and 5) (Instr. 3 and 4) Form: Beneficial Direct (D) Ownership or Indirect (Instr.
    [Show full text]
  • Abortion-Pdf
    (Name of Project) by (Name of First Writer) (Based on, If Any) Revisions by (Names of Subsequent Writers, in Order of Work Performed) Current Revisions by (Current Writer, date) Name (of company, if applicable) Address Phone Number NOTE: Add American politics to every section and compare American politics and siding with pronatalism or supporting the murdering the baby. ABORTION: AMERICA’S FINAL SOLUTION ---------------------------------------------------- REM: Research. Did Margaret Sanger correspond with Hitler? Did she speak to numerous KKK rallies? REM: Burnishing Chapts. 12-15. ---------------------------------------------------- To M and T. Two women with the courage of convictions not seen in generations. ABORTION: A PRIMER ON AMERICA’S FINAL SOLUTION “A nation, and its people, are considered most atrocious by the manner in which they treat their very weakest” - Calvin Lee Burke FORWARD Before we begin it must be stated that we are going to do this in a semi-secular manner. This so that those seeking to refute -- by ad hominem digression -- this primer as somehow just religious fanaticism will be annulled by things called facts, numbers and authentic historical documents. Also, the use of properly referenced Wiki, Boolean operators, and sundry LexisNexis articles, required for the completed work, was to large to allow for a readable primer. The rough draft and bibliography, will be available separately on-line. Full version of the rough draft w/BIBLIOGRAPHY is on-line here: 2. ABORTION:AMERICA’S-FINAL-SOLUTION.fdr , and also, .pdf for Adobe files at Book.com. Abstract: A History: 140,000,000 abortions in the United States since WWII ... Rhyme this liberal Chime: Here we roe again: Using Roe V.
    [Show full text]
  • FORWARD THINKING New Insights Into How Sears Gains Strength by Better Understanding Customers
    SEARS CANADA INC. SEARS CANADA INC. SEARS CANADA INC. 1997 Annual Report FORWARD THINKING New insights into how Sears gains strength by better understanding customers TRANSFORMING SEARS INSIDE OUT An inside look at Sears $300 million nationwide revitalization program CLOSER TO HOME Sears Whole Home Furniture Stores and dealer stores key to Sears innovative off-mall growth strategy 2 CHAIRMAN’S MESSAGE Paul Walters reflects on 21 FINANCIAL INFORMATION 1997 the gratifying results of 1997, and shares his perspective on Sears strategy for growth 22 Eleven Year Summary 6 FORWARD THINKING Sears reinvents the way it 23 Management’s Discussion and Analysis does business to become more relevant to customers 33 Quarterly Results and Common Share Market 8 BRAND NEW LIFE Creating a brand image for Information and Dividend Highlights Sears helps grow lifetime customer relationships 34 Statement of Management Responsibility 10 TRANSFORMING SEARS INSIDE OUT and Auditors’ Report Revitalization of 9 GTA stores first stage of $300 35 Consolidated Statements of Financial Position million capital investment program to totally transform Sears by the beginning of the new 36 Consolidated Statements of Earnings millennium 36 Consolidated Statements of Retained Earnings 14 THE MANY SIDES OF SEARS Customers see how Sears meets their many needs in new 37 Consolidated Statements of advertising campaign Changes in Financial Position 16 BEST SELLER Sears reveals why catalogue 38 Notes to Consolidated Financial Statements shopping has an exciting future CORPORATE INFORMATION 18 CLOSER TO HOME Off-mall strategy brings 46 Corporate Governance customers closer to Sears 47 Directors and Officers 20 COMMUNITY RELATIONSHIPS Communities benefit from Sears caring side 48 Corporate Information Sears is Canada’s largest single retailer of general merchandise, with department and specialty stores as well as catalogue locations across Canada.
    [Show full text]
  • A Postmortem for Sears - Transcript
    A Postmortem for Sears - Transcript Tom Mullooly: In episode 123, we're going to do a postmortem on Sears Roebuck. Stick around. Welcome to the Mullooly Asset show. I'm your host, Tom Mullooly, and this is episode number 123. One, two, three red light. So today, the day that we're recording this, it looks like Sears Roebuck is going to ask the bankruptcy court to enter liquidation, and that's the end of Sears as we know it. So I thought it would be a good time to just kind of take a walk down memory lane. There's a lot of people in the media today who are comparing Amazon to Sears saying, "Hey, Sears was the Amazon of its day." And I just want to share a couple of things that I've learned over the years about Sears. It was started in 1886 as a mail order company. Richard Sears actually sold watches through a catalog that he put together. A year later, in 1887, he hires a guy named Alvah Roebuck to repair watches. So I guess they had problems with some of the watches that they were selling through their catalog. They then added jewelry, and the mail order business really took off. What helped them, a little bit of history for you, is that in the late 1880s, the US government started a program called rural free delivery, or RFD. Some of you are around my age may remember a TV show after Andy Griffith left. It was called Mayberry RFD, and everybody always wanted to know what RFD stood for.
    [Show full text]
  • COMPLAINT Savings Plan, and All Other Similarly Situated Plan Participants and Beneficiaries, JURY TRIAL DEMANDED
    Case: 1:17-cv-05825 Document #: 1 Filed: 08/10/17 Page 1 of 102 PageID #:1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION LAVARITA D. MERIWETHER, individually, and in her representative CASE NO. 1:17-cv-5825 capacity on behalf of the Sears Holdings Savings Plan, the Sears Holdings Puerto Rico CLASS ACTION COMPLAINT Savings Plan, and all other similarly situated Plan participants and beneficiaries, JURY TRIAL DEMANDED Plaintiff, v. SEARS HOLDINGS CORPORATION, EDWARD S. LAMPERT, SEARS HOLDINGS CORPORATION ADMINISTRATIVE COMMITTEE, MICHAEL O’MALLEY, SEARS HOLDINGS CORPORATION INVESTMENT COMMITTEE, CAROL HINES WACASER, and JOHN DOES 1 -10, Defendants. Case: 1:17-cv-05825 Document #: 1 Filed: 08/10/17 Page 2 of 102 PageID #:2 Table of Contents I. INTRODUCTION ............................................................................................................ 1 II. NATURE OF THE ACTION ........................................................................................... 1 III. JURISDICTION AND VENUE ....................................................................................... 6 IV. PARTIES .......................................................................................................................... 6 A. Plaintiff ................................................................................................................. 6 B. Defendants And Their Fiduciary Status ................................................................ 6 1. Company Defendant ................................................................................
    [Show full text]
  • First Sentier Investors American Listed Infrastructure Billionaire Buddies Love American Listed Infrastructure, So Should You!
    First Sentier Investors American Listed Infrastructure Billionaire buddies love American listed infrastructure, so should you! By Jessica Jouning and Andrew Greenup American Listed Infrastructure | January 2021 For qualified investors only Billionaire buddies, Warren Buffett and Bill Gates both have large portfolios of American listed infrastructure assets These billionaires are investing in infrastructure because it provides inflation- protected income and defensive capital growth Should you have an investment in American listed infrastructure to protect and grow your wealth? Legendary self-made billionaires Warren Buffett and Bill Gates It is not surprising that two of the world’s greatest capitalists are large investors in American listed infrastructure companies. have invested in American listed infrastructure companies These two friends have investments in US freight railways, to protect and grow their wealth. It’s always wise to monitor utilities, renewable energy, waste management, natural gas the investment decisions of smart people. From Berkshire pipelines and airports. Hathaway’s latest annual report “Today, BHE has the operating talent and experience to manage truly huge utility projects – Infrastructure provides essential services to society. These requiring investments of $100 billion or more – that could support assets have the defensive characteristics of high barriers to infrastructure benefitting our country, our communities and our entry, strong pricing power, structural growth and predictable shareholders. We stand ready, willing and able to take on such cash flows. opportunities.” American Listed Infrastructure (ALI) is a United States (US) So what are these brilliant billionaires actually investing in? focused asset class that provides investors with inflation- protected income and solid capital growth. It consists of listed Warren Buffett and Bill Gates companies that have infrastructure assets in the US.
    [Show full text]
  • Chapter 11 for an American Icon: What Sears Shows Us About Failed Leadership
    DECEMBER 6, 2018 Chapter 11 for an American Icon: What Sears Shows Us About Failed Leadership On October 15 — a few months after the 125th birthday of what was once the world’s largest retailer — Sears Holdings sought Chapter 11 protection from a $134 million debt payment and announced it would close 142 stores. Thirty years ago, Sears was a retail and mail order giant. For many of its 125 years, the company dominated the retail industry, bringing quality products at affordable prices to much of America. Customer loyalty to Sears was legendary. Workshops were filled with Craftsman tools, homes were equipped with Kenmore appliances and decorated with Sears furnishings, while Sears clothing filled closets and cars ran on DieHard batteries. The Christmas shopping season wasn't complete without the Sears "Wish Book." Sears was dependable, with reliable products you could trust and a warranty that placed customer service above everything else. So, what happened? In a recent article for Total Retail, global leadership and customer service expert Shaun Belding observed that, “There is, of course, never just one thing that leads to the downfall of a company. It’s almost always a progressive and insidious erosion created by poor leadership and short-sighted decisions.” In the case of Sears, the company lost sight of what made it successful. Sears, after all, had been an innovator for much of its history. To put the Sears loss in context, here are some milestones: “Founded shortly after the Civil War, the original Sears, Roebuck & Company built a catalog business that sold Americans the latest dresses, toys, build-it-yourself houses and even tombstones.
    [Show full text]
  • Cascade Investment Advisors, Inc. Form 13F-HR Filed 2021-08-04
    SECURITIES AND EXCHANGE COMMISSION FORM 13F-HR Initial quarterly Form 13F holdings report filed by institutional managers Filing Date: 2021-08-04 | Period of Report: 2021-06-30 SEC Accession No. 0001681490-21-000004 (HTML Version on secdatabase.com) FILER Cascade Investment Advisors, Inc. Mailing Address Business Address 503 HIGH STREET 503 HIGH STREET CIK:1681490| IRS No.: 911815841 | State of Incorp.:OR | Fiscal Year End: 1231 OREGON CITY OR 97045 OREGON CITY OR 97045 Type: 13F-HR | Act: 34 | File No.: 028-17496 | Film No.: 211143619 503-417-1950 Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document OMB APPROVAL UNITED STATES SECURITIES AND EXCHANGE OMB Number: 3235-0006 COMMISSION Expires: July 31, 2015 Washington, D.C. 20549 Estimated average burden hours per response: 23.8 FORM 13F FORM 13F COVER PAGE Report for the Calendar Year or Quarter Ended: 06-30-2021 Check here if Amendment: ☐ Amendment Number: This Amendment (Check only one.): ☐ is a restatement. ☐ adds new holdings entries. Institutional Investment Manager Filing this Report: Name: Cascade Investment Advisors, Inc. Address: 503 HIGH STREET OREGON CITY, OR 97045 Form 13F File Number: 028-17496 The institutional investment manager filing this report and the person by whom it is signed hereby represent that the person signing the report is authorized to submit it, that all information contained herein is true, correct and complete, and that it is understood that all required items, statements, schedules, lists, and tables, are considered integral parts of this form. Person Signing this Report on Behalf of Reporting Manager: Name: Michelle Rand Title: President and Chief Compliance Officer Phone: 503-703-3622 Signature, Place, and Date of Signing: Michelle Rand Oregon City, OREGON 08-04-2021 [Signature] [City, State] [Date] Report Type (Check only one.): ☒ 13F HOLDINGS REPORT.
    [Show full text]
  • Sears: Death by Debt
    Sears: Death by Debt Minutemen Equity Fund Hannah Kim, Joshua Owczarski, Sam Jezard Isenberg School of Management University of Massachusetts, Amherst Submitted February 20, 2015 Table of Contents Company Overview .............................................................................................................................................. 3 Competition ............................................................................................................................................................. 3 Debt ............................................................................................................................................................................ 4 Financials ................................................................................................................................................................. 6 REIT Conversion ................................................................................................................................................. 10 Sears’ Turnaround potential? ........................................................................................................................ 11 Conclusion............................................................................................................................................................. 13 References ............................................................................................................................................................ 13 2 Company Overview
    [Show full text]
  • Autonation 2016 Annual Report
    2016 AutoNation, Inc. 2016 ANNUAL REPORT REPORT ANNUAL Inc. 2016 AutoNation, ANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2016 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number: 1-13107 AutoNation, Inc. (Exact name of registrant as specified in its charter) Delaware 73-1105145 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 200 SW 1st Ave Fort Lauderdale, Florida 33301 (Address of principal executive offices) (Zip Code) (954) 769-6000 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, Par Value $0.01 Per Share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
    [Show full text]
  • Fairholme Sears Case Study III August 2012
    CASE STUDY III FAIRHOLME Ignore the crowd. Fairholme Ignore the crowd. This presentation uses Sears Holdings Corporation (“Sears” or the “Company”) as a case study to illustrate Fairholme Capital Management’s investment strategy for the Fairholme Fund. In the pages that follow, we show Fairholme Fund shareholders why we “Ignore the crowd” with regard to our portfolio positions that are currently out of favor in the market. However, nothing in this presentation should be taken as a recommendation to anyone to buy, hold, or sell certain securities or any other investment mentioned herein. Our opinion of a company’s prospects should not be considered a guarantee of future events. Investors are reminded that there can be no assurance that past performance will continue, and that a mutual fund’s current and future portfolio holdings always are subject to risk. As with all mutual funds, investing in the Fairholme Fund involves risk including potential loss of principal. Opinions expressed are those of the author and/or Fairholme Capital Management, L.L.C. and should not be considered a forecast of future events, a guarantee of future results, nor investment advice. The Fairholme Fund’s holdings and sector weightings are subject to change. As of May 31, 2012, Sears securities comprised 10% of the Fairholme Fund’s total net assets. The Fairholme Fund’s portfolio holdings are generally disclosed as required by law or regulation on a quarterly basis through reports to shareholders or filings with the SEC within 60 days after quarter end. A complete list of the Fairholme Fund’s top ten holdings is available on our website at www.fairholmefunds.com.
    [Show full text]