Bankruptcy Law News

Sears Judge Approves Most of Debt Sale, Sets Hearing on Lockup

Dec. 20, 2018, 9:17 PM

The bankruptcy judge overseeing the Sears Holdings Corp. case approved most aspects of a controversial sale of intercompany notes Dec. 20 but said he would hold a later hearing on a provision of the deal that prevents more of the debt from being sold.

As a condition of Cyrus’s winning $82.5 million bid for the medium-term notes, Sears agreed not to sell any additional notes.

“I don’t believe I approved a lockup of Sears Re,” Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York said in court in White Plains, N.Y., referring to a chunk of debt held by an insurance subsidiary.

Drain also said he didn’t see any evidence that Cyrus, the winner of the auction for the notes, had acted in bad faith.

Drain also said he didn’t believe the auction was conducted in such a way that hurt either Omega Advisors or Och-Ziff, both of which filed objections to the auction.

Drain set hearing on lockup for Jan. 2, according to Drain’s divisional manager.

The case is In re Sears Holdings Corp., Bankr. S.D.N.Y., No. 18- 23538, 12/20/18

—With assistance from Davide Scigliuzzo.

©2018 Bloomberg L.P. All rights reserved. Used with permission

To contact the reporters on this story: Josh Saul in New York at jsaul15@bloomberg.net; Claire Boston in New York at cboston6@bloomberg.net

To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net Dan Wilchins

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