A dispute between the bankrupt shell company left behind after Edward Lampert’s purchase of Sears Holdings Corp.’s top stores and a number of foreign vendors is heating up, the Wall Street Journal reported. The suppliers filed court papers last week seeking to compel payment for merchandise purchased during or just before bankruptcy and objecting to the disclosure statement, which lays out the Sears bankruptcy estate’s reorganization plan. Apex Tool Group LLC, the maker of Craftsman-branded tools; Winners Industry Co., a China-based maker of custom Christmas trees; and Gokaldas Exports Ltd. and Pearl Global Industries Ltd., both Indian apparel makers; are looking to force Sears to pay them for goods delivered after Sears entered bankruptcy or within 20 days before filing for court protection. All four suppliers argue that their claims for payment should be treated as administrative expenses, which have top priority in a bankruptcy because of the timing of the deliveries, according to court filings. The dispute has been brewing since last year and is coming to a head as the Sears bankruptcy estate attempts to wind up its affairs and get the bankruptcy court to approve a plan of reorganization that will pay out creditors, lawyers and other advisers before closing the case. Read more. (Subscription required.)
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Lenders and hundreds of investors yesterday agreed to pay $231 million to end their decade-long legal fight over a clerical error in a $1.5 billion loan to General Motors that was administered by JPMorgan Chase & Co., Reuters reported. The settlement payment will benefit the unsecured creditors of General Motors’ 2009 bankruptcy, as well as the U.S. and Canadian governments, which helped finance GM’s chapter 11 case. The unsecured creditors, who collected pennies on the dollar from GM’s bankruptcy, have been trying for years to recoup some of the $1.5 billion that was paid to GM’s secured lenders. The $1.5 billion loan was syndicated to hundreds of investors who were defendants in the lawsuit. The individual settlement contributions by JPMorgan, a law firm that handled the paperwork and the investors in the loan were not disclosed in court documents. The dispute stemmed from the unintentional release of a lien on GM equipment due to a paperwork error. At the end of 2008, the automaker was preparing to pay off a $300 million financing. The law firm handling the paperwork accidentally included a lien that secured the $1.5 billion loan in the list of security interests it terminated after the $300 million was repaid.
Goodwill of Southern Nevada emerged from bankruptcy last week, almost two years after it filed for chapter 11 protection, the Las Vegas Review-Journal reported. The thrift-store chain’s reorganization plan, approved this month by U.S. Bankruptcy Judge Bruce Beesley, took effect last Thursday, court records show. The plan calls for some debt forgiveness and a new debt-payment structure, and cements previously renegotiated retail leases, according to Goodwill CEO John Helderman. Goodwill had 21 stores and about 1,000 employees at the time it filed for bankruptcy protection. It now has 17 locations and roughly 800 employees, Helderman said in a recent interview. Helderman said that the company took on rents that were too high, adding Goodwill “fell in love” with so-called build-to-suit projects, or custom-built stores. Five build-to-suit locations were developed for Goodwill between 2015 and 2017, he said. Goodwill also issued around $22 million in bonds in late 2015. Helderman said the group borrowed the money mainly to buy three of the custom-built stores, but also to refinance some debt. However, retail sales were far from robust, and stores had an “overabundance of labor,” according to a mid-2017 management consultant report from Jim Martin, president and CEO of the Goodwill networks in Eugene, Oregon and Alaska.