In this article, Adam Stein-Sapir of Pioneer Funding, LLC, provides expert insight on the complexities of asset sales in bankruptcy cases.
Article Link: https://nypost.com/2019/01/13/hedge-fund-wants-to-buy-sears-brands/
Summary
A hedge fund has expressed interest in acquiring the Kenmore and DieHard brands from the Sears bankruptcy estate. This interest comes as Sears is set to consider bids for its assets, including a substantial offer from its chairman Eddie Lampert. Lampert’s bid includes additional funds for extra assets and real estate properties. However, the hedge fund’s bid is contingent on the rejection of Lampert’s offer. Creditors are concerned about Lampert’s potential influence and the possibility of “equitable subordination,” which could lead to prolonged legal disputes. Adam Stein-Sapir, a distressed asset expert, commented on the potential complications a buyer might face due to the various parties involved and their interests in the assets.
- The hedge fund’s interest in Kenmore and DieHard is dependent on the non-acceptance of Lampert’s bid.
- Lampert’s offer includes $5 billion-plus for Sears’ assets, with an additional $600 million for other assets.
- Creditors are wary of Lampert’s influence and the associated debt with the brands, which could complicate the sale.
Q&A
What are the potential complications for a buyer interested in Sears’ brands during the bankruptcy process?
The buyer could face challenges due to the interests of multiple parties, including creditors, Sears, and ESL Investments. There is also the issue of the brands being encumbered by approximately $900 million of debt, and the potential for legal disputes over “equitable subordination.”
How might the sale of Sears’ brands be affected by Eddie Lampert’s involvement?
Eddie Lampert’s involvement could lead to objections from his hedge fund, ESL Investments, and complicate the sale due to the debt associated with the brands and claims from various parties. Additionally, the government’s Pension Benefit Guaranty Corp. has an interest in the proceeds to cover benefits for Sears retirees.
What is “equitable subordination” and how does it relate to the Sears bankruptcy case?
Equitable subordination is a legal doctrine that may be used by creditors to argue that Lampert’s hedge fund firm, ESL Investments, unfairly positioned itself ahead of other creditors by loaning money to Sears entities. This could lead to extended legal battles if creditors believe they are disadvantaged by such actions. For more information on bankruptcy proceedings and creditor concerns, one can visit Pioneer Funding LLC’s guide on bankruptcy.
