/raid1/www/Hosts/bankrupt/TCRLA_Public/190930.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Monday, September 30, 2019, Vol. 20, No. 195
Headlines
B R A Z I L
BR PROPERTIES: Moody's Affirms Ba2 CFR & Alters Outlook to Stable
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: 2019 Budget Expected to be 9.9% Higher
DOMINICAN REPUBLIC: Stricter Control Over Foreign Currencies
[*] DOMINICAN REPUBLIC: Fuel Delay Emphasize Need for Renewables
J A M A I C A
DIGICEL GROUP: Lawsuit vs. Antigua & Barbuda Resolved
THOMAS COOK: Tourists Stranded in Jamaica After Collapse
M E X I C O
ASEGURADORA PATRIMONIAL: Moody's Withdraws Ba1 Global IFS Ratings
CEMEX SAB: S&P Affirms 'BB' ICR on Steady Leverage Trajectory
CREDITO REAL: Fitch Rates New Euro-Denominated Unsec. Notes 'BB+'
FINANCIERA INDEPENDENCIA: S&P Affirms 'BB-' Issuer Credit Rating
P U E R T O R I C O
KONA GRILL: $25MM Assets Sale to Kona Grill Acquisition Okayed
SEARS HOLDINGS: Committee Files Statement Supporting Plan
SEARS HOLDINGS: Files Memorandum in Support of Plan Confirmation
SEARS HOLDINGS: Oct. 3 Hearing on Plan Confirmation
T R I N I D A D A N D T O B A G O
PETROLEUM CO: T&T Chamber Seeks Full Transparency on Refinery Sale
X X X X X X X X
[*] BOND PRICING: For the Week September 23 to September 27, 2019
- - - - -
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B R A Z I L
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BR PROPERTIES: Moody's Affirms Ba2 CFR & Alters Outlook to Stable
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Moody's America Latina Ltda. affirmed BR Properties S.A.'s Ba2
(global scale) / Aa2.br (national scale) corporate family ratings
and its Ba2 (global scale) / Aa2.br (national scale) senior secured
rating. In the same action, the rating agency also affirmed the
company's Ba3 (global scale) / A2.br (national scale) senior
unsecured rating and revised the company's rating outlook to stable
from negative.
The following ratings were affirmed:
BR Properties S.A. --Ba2 / Aa2.br corporate family rating
BR Properties S.A. -- Ba2 / Aa2.br senior secured rating
BR Properties S.A. -- Ba3 / A2.br senior unsecured rating
Outlook action:
Outlook revised to stable from negative
RATINGS RATIONALE
The affirmation of BR Properties' global and national scale ratings
as well as the revision of its rating outlook reflect the company's
progress in its deleveraging and liability management plan to
strengthen the balance sheet and optimize its capital structure.
Notable achievements in the first half of 2019 include the
company's early redemption of its 9% coupon USD 185 (BRL 757
million) senior unsecured perpetual notes, along with a reduction
in total debt of slightly over BRL 1.0 billion. The ratings also
consider the firm's strong franchise and reputation as one of the
largest owners and developers of high-quality commercial real
estate in Brazil, as well as its seasoned management team, which
has operated through various commercial real estate cycles.
Additionally, BR Properties is benefiting from a favorable
operating environment, supported by Brazil's economic recovery,
growing tenant demand and improving market fundamentals (declining
vacancy rates, less new supply) in the Class A+/A office space in
its targeted submarkets, and the current, historically low interest
rate environment.
Between year-end 2018 and June 30, 2019, the company reduced its
total indebtedness by 25% to approximately BRL 3.06 billion, using
a combination of net proceeds from asset sales and cash on hand. As
of the trailing 12-month period, ended on June 30, 2019, total debt
to market-value gross assets and net debt-to-EBITDA (Moody's
adjusted) were 32% and 7.7x, respectively, compared to 38% and 8.3x
at year-end 2018. Considering the BRL 576 million of early
redemptions and final loan payments made during the second quarter
through July 2019, as well as the pro forma effects from BRL 590
million of completed asset sales, BR Properties further amortized
an additional BRL 294 million of debt, subsequent to second
quarter-end 2019. With the recently announced sale of Ed. Chucri
Zaidan for approximately BRL 305 million, Moody's expects that the
real estate company could further decrease its net debt-to EBITDA
into the low 6.0x range, if not lower, by year-end 2019.
These strengths, however, are partially offset by the operating
portfolio's weak occupancy rate, its large exposure to the sluggish
Rio de Janeiro office market as well as its limited financial
flexibility due to a small, unencumbered asset pool, approximately
25% of gross assets, and a weak fixed charge coverage ratio at less
than 1.0x, as of second quarter-end 2019. While the portfolio's
occupancy rates are still below their pre-2014 to 2016 recession
levels, BR Properties' physical and financial occupancy rose
approximately 750 basis points (bps) on average, as of the second
quarter, to approximately 74% and 83%, respectively, from the same
period last year. Excluding the recent asset sales, management has
been reducing vacancies on a quarterly sequential basis from its
peak of approximately 33% in early 2017. Between second quarter
2019 and July 2019, the company signed 28,800 square meters of new
leases. Moreover, Petrobras' decision to extend its presence in the
Ventura Tower East through early 2020, the increase in Ed.
Passeio's occupancy rate to 90%, as well as declining vacancy rates
in Sao Paulo's Class A+/A office markets reflect strong tenant
demand for top-quality space. With less new inventory expected over
the next several years, BR Properties should become well positioned
to drive rents on new lease and renewals contracts in its
repositioned, higher-quality portfolio.
The stable outlook incorporates the expectation that BR Properties
will continue its deleveraging and liability management efforts to
shore up its balance sheet, while also increasing its occupancy
levels and strengthening both the quality of the portfolio and its
cash flows.
Upward rating momentum for BR Properties would be predicated upon
the company achieving and maintaining the following criteria on a
sustained basis: 1) net debt to EBITDA below 5.0x; 2) total debt
between 25% and 30% of gross assets; 3) maintenance of a strong
cash position to meet its near-term debt maturities; 4) an
unencumbered asset base above 35% of gross assets; 5) fixed charge
coverage ratio above 2.0x; and 6) occupancy levels for the
stabilized operating portfolio closer to 90%, excluding the effects
of assets sales. Additionally, positive rating movement in Brazil's
sovereign credit profile would provide potential uplift for BR
Properties' global scale rating.
Downward rating pressure would result from the following criteria
on a consistent basis: 1) the company's inability to reduce net
debt to EBITDA below 7.0x; 2) total debt approaching 40% of gross
assets; 3) inability to increase the occupancy levels for the
stabilized operating portfolio, above 80%, excluding the effects of
asset sales; 4) unencumbered assets below 20% of gross assets; and
5) fixed charge coverage ratio remaining below 1.0x. A negative
change in its view of the Brazil's sovereign credit profile could
also potentially place downward pressure on the company's ratings.
Moody's last rating action with respect to BR Properties S.A. was
on February 20, 2018 when Moody's newly assigned a Ba2 (global
currency) / Aa2.br (national scale) rating to the company's
existing BRL 50 million local, senior secured debentures.
Based in the City of Sao Paulo, Brazil, BR Properties S.A. is one
of the largest commercial real estate companies and is dedicated to
the ownership, acquisition, management, leasing and development of
high-quality, office towers and logistical/distributions centers.
As of June 30, 2019, the firm owned whole and partial interests in
45 properties, totaling 805 thousand square meters (sqm) of gross
leasable area (GLA). Included are six land parcels available for
future development. At second quarter-end 2019, the company
reported approximately BRL 9.6 billion in gross assets and BRL 5.8
billion in equity.
The principal methodology used in these ratings was REITs and Other
Commercial Real Estate Firms published in September 2018.
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: 2019 Budget Expected to be 9.9% Higher
-----------------------------------------------------------
Dominican Today reports that the Dominican Republic's full cabinet
was suppose to meet last week to to discuss the amount of next
year's budget and according to a source, it would be 9.9 percent
higher than the estimated for yearend 2019, which for the first
time that the budget would exceed RD$1.0 trillion (US$19.6
billion).
The General Budget in effect is RD$921.8 billion, which includes a
current expense of RD$643.9 billion and capital expenditure of
RD$121.5 billion, according to Dominican Today.
The amount projected by the tax authorities would represent 17.7%
of GDP and includes a primary expense of RD$696.4 billion, or 14.7%
of GDP, the report notes.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district.
The Troubled Company Reporter-Latin America reported on April 4,
2019 that the Dominican Today related that Juan Del Rosario of the
UASD Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Standard & Poor's credit rating for Dominican Republic stands at
BB- with stable outlook (2015). Moody's credit rating for Dominican
Republic was last set at Ba3 with stable outlook (2017). Fitch's
credit rating for Dominican Republic was last reported at BB- with
stable outlook (2016).
DOMINICAN REPUBLIC: Stricter Control Over Foreign Currencies
------------------------------------------------------------
Dominican Today reports that the Electronic Currency Trading
Platform that the Central Bank will start operating in October will
give that entity stricter control over the movement of foreign
currencies, as well as the possibility of estimating the volume of
dollars that aren't traded in the market.
"This reduces the risk of speculation in that sector, which mostly
demands more dollars than the economy produces," Antonio Ciriaco
Cruz, vice-dean of the Economics Faculty at the Santo Domingo State
University, told EL DIA, according to Dominican Today. "This is
positive for the market, as more dollars could enter the economy,"
he added.
The Forex Trading platform is a system that will be used to conduct
exchange operations in real time, which will allow more
transparency and efficiency to the transactions of purchase and
sale of currencies, the report notes.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district.
The Troubled Company Reporter-Latin America reported on April 4,
2019 that the Dominican Today related that Juan Del Rosario of the
UASD Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Standard & Poor's credit rating for Dominican Republic stands at
BB- with stable outlook (2015). Moody's credit rating for Dominican
Republic was last set at Ba3 with stable outlook (2017). Fitch's
credit rating for Dominican Republic was last reported at BB- with
stable outlook (2016).
[*] DOMINICAN REPUBLIC: Fuel Delay Emphasize Need for Renewables
----------------------------------------------------------------
Dominican Today reports that Energy and Mines Minister Antonio Isa
Conde warned that the Dominican Refinery's "mishap" with fuel oil
is a clear sign that the initiatives to transform the generation
matrix must continue with greater emphasis on renewables and to
take advantage of the country's potential to develop an oil and gas
industry.
Mr. Conde said the institution's agenda seeks to boost those two
topics, considered essential for the energy security of the
Dominican Republic, taking into account planning as a fundamental
element, according to Dominican Today.
"In the facilities of the Government and private investment in the
generation matrix, renewables in the generation park are gaining
more and more weight," the official said, noting that more efforts
are still needed to achieve a deeper change that makes the country
less dependent on fossil fuels and their imports, the report
notes.
Mishap
The Refinery reported delays in the supply of fuel oil for power
plants, citing the storms in the Caribbean region, the report
adds.
About Dominican Republic
Dominican Today reports that Energy and Mines minister, Antonio Isa
Conde warned that the Dominican Refinery's "mishap" with fuel oil
is a clear sign that the initiatives to transform the generation
matrix must continue with greater emphasis on renewables and to
take advantage of the country's potential to develop an oil and gas
industry.
He said the institution's agenda seeks to boost those two topics,
considered essential for the energy security of the Dominican
Republic, taking into account planning as a fundamental element,
Isa Conde said, according to Dominican Today.
"In the facilities of the Government and private investment in the
generation matrix, renewables in the generation park are gaining
more and more weight," the official said, noting that more efforts
are still needed to achieve a deeper change that makes the country
less dependent on fossil fuels and their imports, the report
notes.
The report cites that last week, the country's refinery reported
delays in the supply of fuel oil for power plants, citing the
storms in the Caribbean region.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district.
The Troubled Company Reporter-Latin America reported on April 4,
2019 that the Dominican Today related that Juan Del Rosario of the
UASD Economic Faculty cited a current economic slowdown for the
Dominican Republic and cautioned that if the trend continues,
growth would reach only 4% by 2023. Mr. Del Rosario said that if
that happens, "we'll face difficulties in meeting international
commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Standard & Poor's credit rating for Dominican Republic stands at
BB- with stable outlook (2015). Moody's credit rating for Dominican
Republic was last set at Ba3 with stable outlook (2017). Fitch's
credit rating for Dominican Republic was last reported at BB- with
stable outlook (2016).
=============
J A M A I C A
=============
DIGICEL GROUP: Lawsuit vs. Antigua & Barbuda Resolved
-----------------------------------------------------
RJR News reports that the lawsuit Digicel Group brought against the
Government of Antigua and Barbuda has officially ended following a
court hearing.
Lawyers for both parties declared their agreement to have the
spectrum shared with the Antigua Public Utilities Authority,
according to RJR News.
The court accepted the position of Digicel and the government, the
report notes.
Minister of Information Melford Nicholas says the court is awaiting
the signing of the consent order presented by both parties, the
report adds.
About Digicel Group
Digicel Group is a mobile phone network provider operating in 33
markets across the Caribbean, Central America, and Oceania regions.
The company is owned by the Irish billionaire Denis O'Brien, is
incorporated in Bermuda, and based in Jamaica.
As reported in the Troubled Company Reporter-Latin America on July
16, 2019, Moody's Investors Service downgraded Digicel Group
Limited's corporate family rating to Caa2 from Caa1 and its
probability of default rating to Caa2-PD from Caa1-PD. At the same
time, Moody's downgraded the senior unsecured rating of Digicel
Limited to Caa2 from B3, the senior secured rating of Digicel
International Finance Limited to B3 from B1, the senior secured
rating of Digicel Group One Limited to Caa2 from Caa1 and the
senior unsecured ratings of both Digicel Group Two Limited and
Digicel to Ca from Caa3. The outlook is negative.
THOMAS COOK: Tourists Stranded in Jamaica After Collapse
--------------------------------------------------------
RJR News reports that Britain has repatriated ten per cent of
nationals who were stranded at tourist destinations, including
Jamaica, after the collapse of travel firm Thomas Cook.
Britain's Civil Aviation Authority regulator, which is managing the
UK's biggest repatriation since World War Two after Thomas Cook's
dramatic bankruptcy, in a statement said it flew back 14,700 of the
150,000 stranded Britons, according to RJR News.
Over 300 of the affected travelers in Jamaica were flown home Sept.
23, the report notes.
The CAA said it hoped to bring back another 16,500 people, the
report discloses.
The dramatic collapse of Thomas Cook left 600,000 customers of all
nationalities stranded in popular tourist destinations around the
globe, the report notes.
And Britain's accountancy regulator is considering urgently whether
to investigate the collapse of Thomas Cook and impose punishments
if deemed necessary, the report says.
RJR News discloses that the Financial Reporting Council has the
authority to investigate and sanction auditors of companies and
individuals who are members of the accounting profession.
The regulator announced it was considering an investigation after
the government fast-tracked the Insolvency Service's investigation
into the collapse of the 178-year-old travel firm, the report
says.
Thomas Cook's auditor is EY, which took over from PwC in 2017. Both
are among the UK's so-called big four accountancy firms.
Thomas Cook has had a series of finance chiefs over the past two
years as its problems deepened, the report relays. It has also
faced questions about its accounting methods, the report adds.
===========
M E X I C O
===========
ASEGURADORA PATRIMONIAL: Moody's Withdraws Ba1 Global IFS Ratings
-----------------------------------------------------------------
Moody's de Mexico has withdrawn Aseguradora Patrimonial Danos, S.A.
Ba1 global local-currency and A1.mx national scale insurance
financial strength ratings. At the time of the withdrawal, the
ratings carried a stable outlook.
Moody's has decided to withdraw the ratings for its own business
reasons.
The period of time covered in the financial information used to
determine Aseguradora Patrimonial Danos' ratings are between
January 1, 2013 and December 31, 2018.
Moody's insurance financial strength ratings are opinions of the
ability of insurance companies to pay punctually senior
policyholder claims and obligations.
CEMEX SAB: S&P Affirms 'BB' ICR on Steady Leverage Trajectory
-------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' global scale issuer credit
ratings on Mexico-based cement producer CEMEX S.A.B. de C.V. and on
its rated subsidiaries. S&P said, "We also affirmed our national
scale ratings on CEMEX and Cemex Mexico at 'mxA/mxA-1'. At the same
time, we affirmed our issue-level rating on CEMEX's senior secured
debt at 'BB' and on perpetual bonds at 'BB-'. We also affirmed our
national scale issue-level ratings on the company's subordinated
debt at 'mxBBB+'." The recovery rating on CEMEX's rated senior
secured and subordinated debt remains at '3' and '6',
respectively.
S&P said, "During 2019, CEMEX's key credit metrics have remained in
line with our current assessment of its financial risk profile,
although we now don't expect debt to EBITDA to approach 4.5x by the
end of 2019, as we previously expected. Once again, CEMEX is facing
difficult business conditions in key markets that constrain the
company's ability to support EBITDA growth. In particular, CEMEX's
performance for the past nine months has suffered from a
double-digit drop in volume sales in the Mexican market, which
represents about 40% of consolidated EBITDA. The volume drop stems
from the construction industry's severe contraction during this
year due to slow government spending on infrastructure projects and
public works, a decline in housing starts, and a jittery business
sentiment because certain government actions have undermined
investor confidence.
"We expect CEMEX to continue facing downside risks in Mexico in the
next 12 months, given that we haven't identified specific factors
that would trigger a substantial rebound in demand for cement in
that market. However, CEMEX has a long track-record of financial
discipline, and we expect management to remain committed to
improving the capital structure, strengthening key credit metrics,
and protecting liquidity. Under its 'A Stronger CEMEX' strategic
plan, the company has already divested assets to help reduce debt,
and continues to implement cost savings to improve profitability.
This plan also includes dividend payments for $150 million starting
in 2019 and small share repurchases, which in our view, don't
conflict with its debt reduction target.
"Our view of CEMEX's financial risk profile remains unchanged. Our
updated forecast on the company incorporates an additional debt
reduction of at least $640 million in 2019, which should maintain
the leverage ratio in the 4.5x area in the next 12 months."
CREDITO REAL: Fitch Rates New Euro-Denominated Unsec. Notes 'BB+'
-----------------------------------------------------------------
Fitch Ratings assigned a final rating of 'BB+' to Credito Real,
S.A.B. de C.V. Sofom, E.N.R.'s proposed euro-denominated senior
unsecured notes. The final rating is in line with the expected
rating assigned on Sept. 12, 2019.
The EUR350 million notes due 2027 are at a fixed rate and will be
redeemed in whole or in part at the option of the issuer. In the
event of a change of control, the holders of the notes have the
right to require Credito Real to purchase all or a portion of the
notes. The notes will be unconditionally guaranteed by two
restricted subsidiaries of Credito Real.
Credito Real intends to use net proceeds from the notes to
refinance existing debt, specifically to pay a tender offer of a
portion of the 2023 senior notes as well as for general corporate
purposes.
Credito Real, S.A.B. de C.V., Sociedad Financiera de Objeto
Multiple, Entidad no Regulada
Senior Unsecured BB+ New Rating; previously at BB+(EXP);
KEY RATING DRIVERS
The rating of the senior global debt is at the same level as
Credito Real's Long-Term Issuer Default Ratings (IDRs) of 'BB+', as
the likelihood of default of the notes is the same as the one of
Credito Real.
Credito Real's ratings are highly influenced by its company
profile, which is underpinned by its well-positioned franchise in
the payroll deductible loans business in Mexico, and its business
model differentiators, such as its income/risk sharing agreements
with distributors, which have historically resulted in
peer-superior asset quality. The ratings are also heavily
influenced by its comparatively higher risk appetite relative to
peers, underpinned by its inorganic growth strategy, its growing
presence in low rated countries in Central America as well as the
operational, political and reputational risks related to its
payroll business.
Credito Real's main financial strengths include strong
profitability metrics supported by resilient margins and a growing
loan portfolio, as well as adequate loss absorption capacity.
Rating constraints include the reliance on wholesale funding
sources and its exposure to FX rate fluctuations mainly arising
from the unhedged principal of its subordinated notes and its
operations outside of Mexico.
Capitalization and leverage metrics remain sound. As of June 2019,
leverage (measured as total debt to tangible equity) was 4.0x.
Fitch estimates that the proposed global senior unsecured notes on
a pro forma basis, and considering the most recent shares
repurchase, would result in a slight increase of its leverage
metrics to approximately 4.2x. The new debt issuance will result in
a more comfortable amortization schedule and lower refinancing
needs over the next years. There will not be increased exposure to
market risk as a result of this transaction, as the company is
planning to hedge FX and interest rate risk though derivative
financial instruments for both the principal and interest
payments.
RATING SENSITIVITIES
The rating of this issue will remain aligned to the company's
Long-Term IDRs and, therefore, it would mirror any potential change
on the latter.
FINANCIERA INDEPENDENCIA: S&P Affirms 'BB-' Issuer Credit Rating
----------------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' long-term global scale issuer
credit rating on Financiera Independencia S.A.B. de C.V. SOFOM
E.N.R. (Financiera Independencia). At the same time, S&P affirmed
its 'mxBBB+/mxA-2' national scale ratings on the company. The
outlook on both rating scales remains negative.
S&P said, "We also affirmed our 'BB-' issue-level rating on the
company's $250 million senior unsecured notes. The rating on the
senior unsecured debt incorporates our view that as of June 30,
2019, secured debt represented less than 30% of adjusted assets and
unencumbered assets completely covered unsecured debt.
Consequently, we do not apply notches of subordination to this
issuance.
"Our issuer credit ratings on Financiera Independencia reflect the
company's gradual geographic diversification--mainly through its
U.S. operations--along with its relative stable bottom-line
results, supported by its solid market presence in the microfinance
sector. Our ratings also incorporate our projected risk-adjusted
capital (RAC) ratio of about 8.8%, on average, for 2019-2020,
sustained by stable internal capital generation and modest credit
growth. Financiera Independencia's asset quality metrics remains
the most important constraint to the ratings, because these
continue to be worse than other nonbank financial institutions
(NBFIs) in Mexico and regional peers. Additionally, the ratings
incorporate our view of the company's diversified funding structure
that relies on market debt with long-term tenures (2024), and
credit facilities from commercial and development banks. Finally,
the company's liquidity position provides adequate cushion under a
stress scenario in the next 12 months. The stand-alone credit
profile (SACP) remains 'bb-'."
=====================
P U E R T O R I C O
=====================
KONA GRILL: $25MM Assets Sale to Kona Grill Acquisition Okayed
--------------------------------------------------------------
Judge Christopher S. Sontchi of the U.S. Bankruptcy Court for the
District of Delaware authorized Kona Grill, Inc. and affiliates to
sell substantially all their assets to Kona Grill Acquisition, LLC
for $25 million.
The Purchase Agreement is approved.
The free and clear of all Liens, Claims and Encumbrances, and other
interests of any kind and any nature, whether known or unknown,
contingent or non-contingent, liquidated or unliquidated, except as
otherwise expressly provided in the Purchase Agreement, with any
and all such Liens, Claims and Encumbrances, and other interests to
attach to the proceeds of such sale.
Pursuant to section 365 of the Bankruptcy Code, the assumption and
assignment of the Purchased Contracts by the Debtors, as identified
in the Purchase Agreement, to the Purchaser, is authorized and
approved in all respects. The Purchaser will pay, concurrently
with the Closing and as a condition to the Debtors' assumption and
assignment thereof, all Cure Amounts owing to the
counterparties to the Purchased Contracts that are assumed at the
Closing.
Pursuant to Section 2.3(c) of the APA, the Purchaser will comply
with all lease and contract obligations in accordance with each
Purchased Contract, whether such obligations relate to periods
prior to the Closing or afterwards, including, as applicable, to
pay when due (A) amounts owed or accruing under any such unexpired
lease that are not otherwise due and owing as of the date
objections to cure amounts were due thus not required to be
asserted as a Cure Amount, regardless of when such amounts or
obligations accrued including, on account of common area
maintenance, insurance, taxes, utilities and similar charges, (B)
any regular or periodic adjustment or reconciliation of charges
under such unexpired leases that are not due or have not been
determined as of the date hereof, (C) any percentage rent that
comes due under such Purchased Contracts, (D) post-assumption
obligations under such Purchased Contracts that are unexpired
leases, (E) any obligations to indemnify the non-Debtor
counterparty under such Purchased Contracts that are unexpired
leases for any claims of third parties pursuant to the terms of
such Purchased Contracts that are unexpired leases, which are not
known or liquidated as of the date thereof, and (F) any obligations
arising under such Purchased Contracts that are unexpired leases as
they come due which could not otherwise have been asserted as a
Cure Amount.
The stays provided for in Bankruptcy Rules 6004(h) and 6006(d) are
waived and the Order will be effective immediately upon its entry.
In connection with the closing, KeyBank will deliver to the
Purchaser termination of its financing statements filed in the
applicable jurisdictions under Article 9 of the Uniform Commercial
Code and releases of any lien, security interest, mortgage, or
other encumbrance against any of the Purchased Assets acquired by
the Purchaser. KeyBank's liens will attach to the proceeds of the
Sale.
At closing of the Sale, the Debtors are authorized and directed to
pay $19,464,591 directly to KeyBank and such amount will be applied
to reduce the DIP Obligations.
The balance of the Sale proceeds will be reserved for the Debtors
to pay administrative claims (excluding administrative claims
assumed by the Purchaser) and otherwise wind down these cases, all
in accordance with the budget (Exhibit 3).
As adequate protection for the claims and liens of Bexar County,
Dallas County, El Paso, Harris County, Montgomery County and
Tarrant County, and consistent with the provisions with respect
thereto in paragraph 23 of the final DIP order, $134,725 of
proceeds of the sales of assets located in the state of Texas that
are subject to a lien held by the Local Texas Tax Authorities, will
be deposited in a segregated account as adequate protection for the
secured claims of the Local Texas Tax Authorities prior to the
distribution of any such proceeds to any other creditor. Any valid
liens of the Local Texas Tax Authorities will attach to these
proceeds.
As adequate protection for the claims and liens of Maricopa County
Treasurer, and consistent with the provisions with respect thereto
in paragraph 23 of the final DIP order, $65,666 of proceeds of the
sales of assets located in Maricopa County that are subject to a
lien held by the Maricopa Tax Authorities (and such amount will not
be deemed a cap on such claim), will be deposited in a segregated
account as adequate protection for the secured claims of the
Maricopa Tax Authorities prior to the distribution of any such
proceeds to any other creditor. Any valid liens of the Maricopa
Tax Authorities will attach to these proceeds.
As adequate protection for the claims and liens of the City of
Troy, and consistent with the provisions with respect thereto in
paragraph 23 of the final DIP order, $10,468 of proceeds of the
sales of assets, will be deposited in a segregated account as
adequate protection for the secured claims of Troy prior to the
distribution of any such proceeds to any other creditor. Any valid
liens of Troy will attach to these proceeds.
Within 15 days of the Closing Date, the Debtors will cease all
usage of the Intellectual Property Assets.
The requirements set forth in Bankruptcy Rule 6004(a) are
satisfied.
A copy of the Agreement attached to the Order is available for
free
at:
http://bankrupt.com/misc/Kona_Grill_428_Order.pdf
About Kona Grill
Kona Grill, Inc. -- https://www.konagrill.com/ -- owns and operates
27 casual dining restaurants in 18 states, as well as Puerto Rico,
serving contemporary American favorites, sushi, and alcoholic
beverages throughout the United States and Puerto Rico.
Kona Grill, Inc., and its subsidiaries sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. Del. Lead Case No.
19-10953) on April 30, 2019. As of Dec. 31, 2018, the Debtors'
total assets is $53,613,000 and total liabilities of $74,049,000.
The petition was signed by Christopher J. Wells, chief
restructuring officer.
The Debtors tapped Pachulski Stang Ziehl & Jones LLP as counsel;
Piper Jaffray as investment banker; Alvarez & Marsal North America,
LLC as restructuring advisor and Epiq Corporate Restructuring, LLC
as claims and noticing agent.
SEARS HOLDINGS: Committee Files Statement Supporting Plan
---------------------------------------------------------
The Official Committee of Unsecured Creditors of Sears Holdings
Corporation and its affiliated debtors, filed a statement in
support of confirmation of the Modified Second Amended Joint
Chapter 11 Plan of Sears Holdings Corporation and Its Affiliated
Debtors.
The Plan Currently Represents the Alternative Most Likely To
Maximize Value for Creditors Under the Circumstances and Otherwise
Satisfies Confirmation Requirements.
The principal attacks on the Plan come from Administrative
Claimants and focus on the Debtors' financial position.
Specifically, the Administrative Claimants and certain other
objecting parties argue that the Debtors are administratively
insolvent and, due to the speculative nature of litigation
recoveries, cannot satisfy the requirements of Bankruptcy Code
section 1129(a)(9) and/or meet their burden of showing that the
Plan is feasible in accordance with Bankruptcy Code section
1129(a)(11). These objections should be overruled.
Ultimately, the Administrative Claimants™ objections amount to
nothing more than an expression of their dissatisfaction with the
timing of payment on their claims. While the Creditors' Committee
is sympathetic to their plight, there is no available alternative
to the Plan at this time that would result in the immediate payment
in full of the Administrative Expense Claims.
The Creditors' Committee Settlement Is in the Best Interests of
Creditors. The Plan constitutes a request pursuant to Bankruptcy
Rule 9019 for approval of, among other settlements incorporated
therein, the Creditors' Committee Settlement. The Creditors'
Committee submits that such settlement satisfies the applicable
requirements under Bankruptcy Rule 9019 and should be approved.
The Creditors' Committee Settlement resolves all disputes between
the Debtors and the Creditors' Committee related to the Plan. These
disputes would involve difficult legal and factual questions --
particularly with respect to the proposed settlement of substantive
consolidation and the good faith of the Debtors in proposing a plan
that failed to provide appropriate representation for unsecured
creditors on the Liquidating Trust Board or sufficient funding for
the Liquidating Trust and released certain potentially culpable
parties.
The Remaining Objections to the Plan Should Be Overruled. The
remaining objections to confirmation of the Plan should be
overruled for the reasons set forth in the Debtors' Memorandum. As
the objections filed by the Second Lien Parties implicate the
Liquidating Trust and other post-Effective Date matters, the
Creditors' Committee further responds to certain of the objections
raised by such parties as follows.
No Reserve Is Required on Account of the 507(b) Claims. In their
objections to confirmation, the Second Lien Parties seek a reserve
on account of their asserted 507(b) Priority Claims and Other
507(b) Priority Claims and contend that the Disputed Claims Reserve
is inadequate. No reserve is required for the ESL 507(b) Priority
Claims or Second Lien Parties' Other 507(b) Priority Claims as this
Court already has determined that the amount of any such claims is
zero.
Payment of Indenture Trustee Fees May Be Limited Appropriately. In
consideration of (and an incentive to) the Indenture Trustees and
the Second Lien Agent acting as Disbursing Agents under the Plan,
the Plan provides for the reimbursement of reasonable fees and
expenses incurred by such parties during the Chapter 11 Cases after
payment of Allowed Administrative Expense Claims from the proceeds
of Preserved Causes of Action.
Accordingly, the Creditors' Committee asks that the Court overrule
the objections to and confirm the Plan.
A full-text copy of the Statement of the Official Committee dated
September 13, 2019, is available at https://tinyurl.com/y4omuqsv
from PacerMonitor.com at no charge.
Counsel to the Committee:
Ira S. Dizengoff, Esq.
Philip C. Dublin, Esq.
Sara L. Brauner, Esq.
Zachary D. Lanier, Esq.
AKIN GUMP STRAUSS HAUER & FELD LLP
One Bryant Park
New York, New York 10036
Telephone: (212) 872-1000
Facsimile: (212) 872-1002
About Sears Holdings
Sears Holdings Corporation (OTCMKTS: SHLDQ) --
http://www.searsholdings.com/-- began as a mail ordering catalog
company in 1887 and became the world's largest retailer in the
1960s. At its peak, Sears was present in almost every big mall
across the U.S., and sold everything from toys and auto parts to
mail-order homes. Sears claims to be is a market leader in the
appliance, tool, lawn and garden, fitness equipment, and automotive
repair and maintenance retail sectors.
Sears and Kmart merged to form Sears Holdings in 2005 when they had
3,500 US stores between them. Kmart emerged in 2005 from its own
bankruptcy.
Unable to keep up with online stores and other brick-and-mortar
retailers, a long series of store closings has left it with 687
retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin
Islands as of mid-October 2018. The Company employs 68,000
individuals, of whom 32,000 are full-time employees.
As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total
assets, $11.33 billion in total liabilities and a total deficit of
$4.40 billion.
Unable to cover a $134 million debt payment due Oct. 15, 2018,
Sears Holdings Corporation and 49 subsidiaries sought Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15,
2018.
The Hon. Robert D. Drain is the case judge.
The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel;
M-III Partners as restructuring advisor; Lazard Freres & Co. LLC as
investment banker; DLA Piper LLP as real estate advisor; and Prime
Clerk as claims and noticing agent.
The U.S. Trustee for Region 2 appointed nine creditors, including
the Pension Benefit Guaranty Corp., and landlord Simon Property
Group, L.P., to serve on the official committee of unsecured
creditors. The committee tapped Akin Gump Strauss Hauer & Feld LLP
as legal counsel; FTI Consulting as financial advisor; and Houlihan
Lokey Capital, Inc. as investment banker.
The U.S. Trustee for Region 2 on July 9, 2019, appointed five
retirees to serve on the committee representing retirees with life
insurance benefits in the Chapter 11 cases.
* * *
In February 2019, Bankruptcy Judge Robert Drain has granted Sears
Holdings approval to sell the business to majority shareholder and
CEO Eddie Lampert for approximately $5.2 billion. Lampert's ESL
Investments, Inc., has won an auction to acquire substantially all
of Sears' assets, including the "Go Forward Stores" on a
going-concern basis. The proposal will allow 425 stores to remain
open and provide ongoing employment to 45,000 employees.
SEARS HOLDINGS: Files Memorandum in Support of Plan Confirmation
----------------------------------------------------------------
Sears Holdings Corporation, et al., filed a memorandum of law in
support of confirmation of their modified Second Amended Joint
Chapter 11 Plan.
At the outset of these chapter 11 cases and in the wake of other
large retail bankruptcies, the Debtors were acutely aware that
liquidation was a real possibility. To prevent a value-destructive,
full-scale liquidation, the Debtors determined that the best way to
maximize value was to conduct GOB Sales (defined below) while
evaluating possible paths forward. To allow the Debtors to operate
their businesses in chapter 11 and evaluate their store base while
simultaneously running a sale and auction process, the Debtors
obtained approval for the debtorin- possession financing consisting
of: (i) a $1.83 billion DIP ABL Facility with $300 million of new
incremental capacity, and (ii) a $350 million new money Junior DIP
Facility. Understanding the inherent risk of administrative
insolvency, the Debtors also specifically negotiated with their DIP
and secured lenders for a first-of-its-kind reserve of up to $240
million funded from Prepetition Unencumbered Collateral dedicated
for payment of estate wind down costs at the Debtors' discretion.
The Global Settlement includes compromises made by and between the
Debtors, PBGC, and the Creditors' Committee. At a high level, the
PBGC Settlement resolves issues surrounding the complex
relationship between PBGC and the Debtors, including the
termination of Pension Plans, various assertable claims by PBGC,
PBGC's role at KCD, and the significant joint and several
liabilities against each Debtor, in order to maximize value for all
creditors. The Plan Settlement resolves potentially extremely
costly efforts related to intercompany claims and issues of
substantive consolidation. And the Creditors'Committee Settlement
resolves the Debtors'issues with the Creditors' Committee, namely
regarding post- Effective Date governance and
consent issues, and achieves consensus with and support of the
Debtors' major creditor constituency. Below are summaries of the
key terms of the each settlement.
The Plan fully complies with the requirements of the Bankruptcy
Code. Under section 1129(a)(1) of the Bankruptcy Code, a plan must
comply with the applicable provisions of the Bankruptcy Code. The
legislative history of section 1129(a)(1) explains that this
provision encompasses the requirements of sections 1122 and 1123 of
the Bankruptcy Code governing classification of claims and contents
of the plan, respectively.
Section 1122(a) of the Bankruptcy Code provides that a plan may
place a claim or an interest in a particular class only if such
claim or interest is substantially similar to the other claims or
interests of such class. 11 U.S.C. Sec. 1122(a). Under this
section, a plan may provide for multiple classes of claims or
interests as long as each claim or interest within a class is
substantially similar to other claims or interests in that class.
In addition, substantially similar claims may not be classified
separately when it is done for an illegitimate reason.
The Plan fully complies with each requirement in section 1123(a) of
the Bankruptcy Code, which sets forth applicable requirements that
the proponent of a chapter 11 plan must satisfy:
i. The Plan designates Classes of Claims and Classes of
Interests as required by section 1123(a)(1).
ii. The Plan specifies whether each Class of Claims and
Interests
is impaired or unimpaired under the Plan and the treatment of each
such impaired Class, as required by sections 1123(a)(2) and
1123(a)(3), respectively.
iii. The Plan, except as otherwise agreed to by a holder of a
particular Claim or Interest, provides that the treatment of each
Claim or Interest in each particular Class is the same as the
treatment of each other Claim or Interest in such Class, as
required by section 1123(a)(4).
Section 1129(a)(7) of the Bankruptcy Code requires that a plan be
in the best interests of creditors and stockholders in the Debtors
-- commonly referred to as the "best interests" test. The best
interests test focuses on potential individual dissenting creditors
rather than classes of claims. It requires that each holder of a
claim or equity interest either accept the plan, or receive or
retain under the plan property having a present value -- as of the
effective date of the plan -- not less than the amount such holder
would receive or retain if the debtor were liquidated under chapter
7 of the Bankruptcy Code. Under the best interests test, "the court
must measure what is to be received by rejecting creditors . . .
under the plan against what would be received by them in the event
of liquidation under chapter 7. In doing so, the court must take
into consideration the applicable rules of distribution of the
estate under chapter 7, as well as the probable costs incident to
such liquidation." The Court must evaluate the liquidation
analysis cognizant of the fact that "[t]he hypothetical liquidation
entails a considerable degree of speculation about a situation that
will not occur unless the case is actually converted to chapter
7."
As section 1129(a)(7) makes clear, the liquidation analysis
applies only to non-accepting holders of impaired claims or equity
interests.
Cram down is also relevant to those classes of Claims which are
which impaired and deemed to have rejected the Plan: Class 6
(Intercompany Claims) (All Debtors); Class 7 (Intercompany
Interests) (All Debtors); Class 8 (Subordinated Securities Claims)
(All Debtors); and Class 9 (SHC Existing Equity Interests) (SHC).
Substantially all of the Objections focus on the Debtors' ability
to pay Administrative Expense Claims in compliance with section
1129(a)(9) of the Bankruptcy Code or the Plan's feasibility in
accordance with section 1129(a)(11) of the Bankruptcy Code. Some
Objectors make their arguments under Section 1129(a)(9), others
under Section 1129(a)(11), and some as an issue under both
provisions. The arguments all essentially raise one issue: that the
Objectors believe the Debtors will not have enough money to fund
payment of Administrative Expense Claimants under the Plan. The
Debtors believe that, taking into consideration all of the Debtors'
assets, including the Debtors' highly valuable litigation proceeds,
the Debtors will receive enough proceeds to consummate the Plan and
fund all Administrative Expense Claims. The Plan provides for
payment of Administrative Expense Claims and satisfies Section
1129(a)(9), the Plan is feasible in accordance with Section
1129(a)(11), and the Objections should be overruled.
Wilmington Trust alleges that the Debtors' classification structure
reflects improper gerrymandering. This accusation is simply
incorrect on the record. The Debtors' separate classification of
unsecured creditor classes (e.g., separate classification of PBGC
Claims from the General Unsecured Claims) was not intended to, and
does not, gerrymander class approval. Nor does classification
somehow artificially create an impaired consenting class of
creditors that would not have otherwise accepted the Plan pursuant
to section 1129(a)(10) of the Bankruptcy Code. The Voting
Certification establishes that the unsecured creditor classes
accept the Plan at each Debtor (other than Sears Brands, L.L.C.) in
numerosity. The unsecured creditor classes are not "accepting"
classes solely because the percentage in value accepting each class
is overwhelmed by unsecured notes that are largely owned by the
Second Lien Parties. Further, the Debtors' classification reflects
valid business, factual, and legal distinctions that warranted
separate classification on the record here. Therefore, the
Debtors' classification scheme is appropriate and fully complies
with section 1122 of the Bankruptcy Code.
Objections to the Standard Used to Evaluate the Plan Settlement
Should be Overruled; the 9019 Standard is the Correct Standard to
Evaluate the Plan Settlement. Cyrus, Wilmington Trust, and the
School District argue that the Plan improperly seeks substantive
consolidation through settlement and must actually still meet the
Augie/Restivo standard. Because the Plan Settlement reflects a
settlement of substantive consolidation issues and not an actual
substantive consolidation, the correct standard for approval of the
Plan Settlement is the 9019 Standard.
The PBGC Settlement Meets the 9019 Standard. The PBGC Has
Significant Litigation Claims and Litigation of Such Claims Would
be Complex and Protracted. Wilmington Trust also argues that the
PBGC Settlement does not meet the 9019 Standard because (i) the
PBGC does not have significant litigation claims and (ii) there is
a low chance that litigation associated with PBGC's General
Unsecured Claim and KCD's Administrative Expense Claim will be
complex and protracted. Wilmington Trust Obj., 25-35. As
described in paragraphs 52 to 63 above and herein, the Debtors
contend the opposite, and Wilmington Trust's objection should be
overruled.
The PBGC Liquidating Priority Interest Must be Evaluated in the
Entire Context of the Plan Settlement. Wilmington Trust argues that
the Debtors are improperly providing the PBGC with a new claim on a
secured basis through the PBGC Liquidating Trust Priority Interest,
thereby decreasing recoveries for other unsecured creditors.
Further, Wilmington Trust argues that the Plan Settlement is not
adequately justified, and that the Debtors must prove that the cost
of analyzing intercompany claims must be greater than $17.5
million.
Treatment of Fee Claims under the Plan is Valid and Reasonable.
Certain Objectors allege that the Plan was not filed in good faith
because it provides for the disparate treatment of Administrative
Expense Claims, e.g. the payment in full of Fee Claims from the
Carve-Out Account. Other Objectors have further argued that the
Carve-Out is not a true carve out, but rather an agreement to use
the DIP lenders' collateral, therefore the payment in full of Fee
Claims ahead of Administrative Expense Claims is improper. The
Debtors disagree; as stated above, the Debtors have proposed the
Plan with the goal of maximizing value and providing recoveries to
creditors. The treatment of Fee Claims contained in the Plan was
approved by the Court as part of the DIP Order"which is final and
non-appealable" and this treatment is merely being incorporated
into the Plan.
Provisions of the DIP Order Control. Although the DIP ABL Secured
Obligations, Junior DIP Secured Obligations, and Prepetition ABL
Obligations were satisfied in full or rolled into new Transform
facilities pursuant to the Sale Transaction,34 the Postpetition
Intercompany Obligations still remain outstanding. Of note,
pursuant to paragraph 39 of the DIP Order, all Postpetition
Intercompany Obligations are œsecured by an automatically
perfected security interest in and lien on, as to any Debtor
transferee, all DIP ABL Collateral including all Prepetition ABL
Collateral, Prepetition Encumbered Collateral and Prepetition
Unencumbered Collateral of the transferee for the benefit of the
Debtor transferor (emphasis added). Moreover, no Termination
Notice was delivered and no Termination Date has taken effect. Put
simply, the Debtors continue to use Cash Collateral pursuant to,
and in accordance with, the DIP Order. And unlike other cases where
the DIP financing order explicitly envisions a termination of
rights and remedies under the DIP order upon the repayment in full
of the DIP financing facility, no such provision can be found
here.
Objections to the Plan Injunction Provision Should be Overruled.
Certain Objectors contend that Section 15.8 of the Plan (the
injunction provision) has the effect of improperly discharging the
Debtors in violation of section 1141(d)(3) and cite to two cases to
support such argument: In re Bigler LP and In re Wood Family
Interests, Ltd. See U.S. Trustee Obj., at 9-10; School District
Obj., at 5-6. Section 1141(d)(3) provides that in a chapter 11 case
the debtor may be denied discharge upon confirmation of the plan if
the following three requirements are present: (1) the plan provides
for the liquidation of all or substantially all of the property of
the estate (Section 1141(d)(3)(A)); (2) the debtor does not engage
in business after consummation of the plan (Section 1141(d)(3)(B));
and (3) the debtor would be denied a discharge under Section 727(a)
of this title if the case were a case under chapter 7 of this title
(Section 1141(d)(3)(C)). In re T-H New Orleans Ltd. P'ship, 116
F.3d 790, 803 (5th Cir. 1997).
The Plan complies with all of the requirements of section 1129 of
the Bankruptcy Code, the Objections should be overruled, and the
Plan should be confirmed.
A full-text copy of the Debtors' Memorandum of Law dated September
13, 2019, is available at https://tinyurl.com/y4gygo8w from
PacerMonitor.com at no charge.
Attorneys for Debtors:
Ray C. Schrock, Esq.
Jacqueline Marcus, Esq.
Garrett A. Fail, Esq.
Sunny Singh, Esq.
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
About Sears Holdings
Sears Holdings Corporation (OTCMKTS: SHLDQ) --
http://www.searsholdings.com/-- began as a mail ordering catalog
company in 1887 and became the world's largest retailer in the
1960s. At its peak, Sears was present in almost every big mall
across the U.S., and sold everything from toys and auto parts to
mail-order homes. Sears claims to be is a market leader in the
appliance, tool, lawn and garden, fitness equipment, and automotive
repair and maintenance retail sectors.
Sears and Kmart merged to form Sears Holdings in 2005 when they had
3,500 US stores between them. Kmart emerged in 2005 from its own
bankruptcy.
Unable to keep up with online stores and other brick-and-mortar
retailers, a long series of store closings has left it with 687
retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin
Islands as of mid-October 2018. The Company employs 68,000
individuals, of whom 32,000 are full-time employees.
As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total
assets, $11.33 billion in total liabilities and a total deficit of
$4.40 billion.
Unable to cover a $134 million debt payment due Oct. 15, 2018,
Sears Holdings Corporation and 49 subsidiaries sought Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15,
2018.
The Hon. Robert D. Drain is the case judge.
The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel;
M-III Partners as restructuring advisor; Lazard Freres & Co. LLC as
investment banker; DLA Piper LLP as real estate advisor; and Prime
Clerk as claims and noticing agent.
The U.S. Trustee for Region 2 appointed nine creditors, including
the Pension Benefit Guaranty Corp., and landlord Simon Property
Group, L.P., to serve on the official committee of unsecured
creditors. The committee tapped Akin Gump Strauss Hauer & Feld LLP
as legal counsel; FTI Consulting as financial advisor; and Houlihan
Lokey Capital, Inc. as investment banker.
The U.S. Trustee for Region 2 on July 9, 2019, appointed five
retirees to serve on the committee representing retirees with life
insurance benefits in the Chapter 11 cases.
* * *
In February 2019, Bankruptcy Judge Robert Drain has granted Sears
Holdings approval to sell the business to majority shareholder and
CEO Eddie Lampert for approximately $5.2 billion. Lampert's ESL
Investments, Inc., has won an auction to acquire substantially all
of Sears' assets, including the "Go Forward Stores" on a
going-concern basis. The proposal will allow 425 stores to remain
open and provide ongoing employment to 45,000 employees.
SEARS HOLDINGS: Oct. 3 Hearing on Plan Confirmation
---------------------------------------------------
The hearing to consider (1) confirmation of the Modified Second
Amended Joint Chapter 11 Plan of Sears Holdings Corporation and Its
Affiliated Debtors and (2) the Motion of Debtors for Modification
of Retiree Benefits originally scheduled for September 27, 2019 at
11:00 a.m. (prevailing Eastern Time) and October 3, 2019 at 10:00
a.m. (prevailing Eastern Time) will go forward on October 3, 2019
at 10:00 a.m. (prevailing Eastern Time). The hearing scheduled for
September 27, 2019 at 11:00 a.m. has been cancelled.
Under the Debtors' modified second amended plan, General Unsecured
Claims (Class 4) are impaired. Each such holder thereof shall
receive its Pro Rata share of (i) the Kmart Corp. General Unsecured
Liquidating Trust Interests; (ii) Kmart Corp. Specified Unsecured
Liquidating Trust Interests; (iii) the General Unsecured
Liquidating Trust Interests; (iv) the Specified Unsecured
Liquidating Trust Interests; and (v) any Excess PBGC Amounts that
would have been distributed to PBGC on account of Kmart Corp.
General Unsecured Liquidating Trust Interests and Kmart Corp.
Specified Unsecured Liquidating Trust Interests.
ESL Unsecured Claims (Class 5) are impaired are impaired. Each such
holder thereof shall receive its Pro Rata share of (i) the Kmart
Corp. General Unsecured Liquidating Trust Interests; (ii) the
General Unsecured Liquidating Trust Interests; and (iii) any Excess
PBGC Amounts that would have been distributed to PBGC on account of
Kmart Corp. General Unsecured Liquidating Trust Interests.
PBGC Claims (Class 3) are impaired. PBGC shall receive from the
Liquidating Trust, (i) the PBGC Liquidating Trust Priority Interest
and (ii) in respect of the Allowed PBGC Unsecured Claims, subject
to Section 9.2(a)(viii), PBGC™s Pro Rata share of (w) the Kmart
Corp. General Unsecured Liquidating Trust Interests; (x) Kmart
Corp. Specified Unsecured Liquidating Trust Interests; (y) the
General Unsecured Liquidating Trust Interests; and (z) the
Specified Unsecured Liquidating Trust Interests, in full and final
satisfaction, settlement, release, and discharge of all PBGC Claims
against Kmart Corp.
Intercompany Claims (Class 6) are impaired are impaired. No
separate distributions shall be made under the Plan on account of
Intercompany Claims, and such Claims shall be extinguished by
distribution, contribution, or otherwise, in the discretion of the
Debtors (subject to the Creditors' Committee Notice Procedures)
and in accordance with section 9.2(a) of the Asset Purchase
Agreement.
Intercompany Interests (Class 7) are impaired. On or after the
Effective Date, all Intercompany Interests shall be cancelled.
Subordinated Securities Claims (Class 8)are impaired. Holders of
Subordinated Securities Claims shall not receive or retain any
property under the Plan on account of such Subordinated Securities
Claims.
ARTICLE V TREATMENT OF CLAIMS AND INTERESTS FOR KMART STORES OF
ILLINOIS LLC:
General Unsecured Claims (other than Kmart IL Guarantee Claims)
(Class 4(A)) are impaired. Each such holder thereof shall receive
its Pro Rata share of (i) the General Unsecured Liquidating Trust
Interests and (ii) the Specified Unsecured Liquidating Trust
Interests.
Guarantee Claims (Class 4(B)) are impaired. Each such holder
thereof shall receive its Pro Rata share of: (i) Kmart IL Guarantee
General Unsecured Liquidating Trust Interests; (ii) Kmart IL
Guarantee Specified Unsecured Liquidating Trust Interests; and
(iii) any Excess PBGC Amounts that would have been distributed to
PBGC on account of Kmart IL Guarantee General Unsecured Liquidating
Trust Interests and Kmart IL Guarantee Specified Unsecured
Liquidating Trust Interests.
PBGC Claims (Class 3) are impaired. PBGC shall receive from the
Liquidating Trust, (i) the PBGC Liquidating Trust Priority Interest
and (ii) in respect of the Allowed PBGC Unsecured Claims, subject
to Section 9.2(a)(viii), PBGC™s Pro Rata share of (w) Kmart IL
Guarantee General Unsecured Liquidating Trust Interests; (x) Kmart
IL Guarantee Specified Unsecured Liquidating Trust Interests; (y)
the General Unsecured Liquidating Trust Interests; and (z) the
Specified Unsecured Liquidating Trust Interests, in full and final
satisfaction, settlement, release, and discharge of all PBGC Claims
against Kmart Stores of Illinois LLC.
ESL Unsecured Claims (Class 5)are impaired. Each such holder
thereof shall receive its Pro Rata share of: (i) Kmart IL Guarantee
General Unsecured Liquidating Trust Interests, including any Excess
PBGC Amounts; (ii) the General Unsecured Liquidating Trust
Interests; and (iii) any Excess PBGC Amounts that would have been
distributed to PBGC on account of Kmart IL Guarantee General
Unsecured Liquidating Trust Interests.
Intercompany Claims (Class 6) are impaired. On the Effective Date,
pursuant to the Plan Settlement as provided in Section 9.2 of this
Plan, except as provided in Section 9.2(e), no separate
distributions shall be made under the Plan on account of
Intercompany Claims, and such Claims shall be extinguished by
distribution, contribution, or otherwise, in the discretion of the
Debtors.
Intercompany Interests (Class 7) are impaired. On or after the
Effective Date, all Intercompany Interests shall be cancelled. Each
such holder thereof shall neither receive nor retain any property
of the Estate or direct interest in property of the Estate of the
Debtors on account of such Intercompany Interest.
Subordinated Securities Claims (Class 8) are impaired. Holders of
Subordinated Securities Claims shall not receive or retain any
property under the Plan on account of such Subordinated Securities
Claims.
ARTICLE VI TREATMENT OF CLAIMS AND INTERESTS FOR KMART OF
WASHINGTON LLC:
General Unsecured Claims (other than Kmart WA Guarantee Claims)
(Class 4(A)) are impaired. Each such holder thereof shall receive
its Pro Rata share of (i) the General Unsecured Liquidating Trust
Interests and (ii) the Specified Unsecured Liquidating Trust
Interests.
ESL Unsecured Claims (Class 5) are impaired. Each such holder
thereof shall receive its Pro Rata share of: (i) Kmart WA Guarantee
General Unsecured Liquidating Trust Interests, including any Excess
PBGC Amounts; (ii) the General Unsecured Liquidating Trust
Interests; and (iii) any Excess PBGC Amounts that would have been
distributed to PBGC on account of Kmart WA Guarantee General
Unsecured Liquidating Trust Interests.
PBGC Claims (Class 3) are impaired. PBGC shall receive from the
Liquidating Trust, (i) the PBGC Liquidating Trust Priority Interest
and (ii) in respect of the Allowed PBGC Unsecured Claims, subject
to Section 9.2(a)(viii), PBGC's Pro Rata share of (w) Kmart WA
Guarantee General Unsecured Liquidating Trust Interests; (x) Kmart
WA Guarantee Specified Unsecured Liquidating Trust Interests; (y)
the General Unsecured Liquidating Trust Interests; and (z) the
Specified Unsecured Liquidating Trust Interests, in full and final
satisfaction, settlement, release, and discharge of all PBGC Claims
against Kmart of Washington LLC.
Guarantee Claims (Class 4(B)) are impaired. Each such holder
thereof shall receive its Pro Rata share of: (i) Kmart WA Guarantee
General Unsecured Liquidating Trust Interests, including any Excess
PBGC Amounts; (ii) Kmart WA Guarantee Specified Unsecured
Liquidating Trust Interests; and (iii) any Excess PBGC Amounts that
would have been distributed to PBGC on account of Kmart WA
Guarantee General Unsecured Liquidating Trust Interests and Kmart
WA Guarantee Specified Unsecured Liquidating Trust Interests.
Intercompany Claims (Class 6) are impaired. On the Effective Date,
pursuant to the Plan Settlement as provided in Section 9.2 of this
Plan, except as provided in Section 9.2(e), no separate
distributions shall be made under the Plan on account of
Intercompany Claims, and such Claims shall be extinguished by
distribution.
Intercompany Interests (Class 7) are impaired. On or after the
Effective Date, all Intercompany Interests shall be cancelled. Each
such holder thereof shall neither receive nor retain any property
of the Estate or direct interest in property of the Estate of the
Debtors on account of such Intercompany Interest.
Subordinated Securities Claims (Class 8) are impaired. Holders of
Subordinated Securities Claims shall not receive or retain any
property under the Plan on account of such Subordinated Securities
Claims. On the Effective Date, all Subordinated Securities Claims
shall be deemed cancelled without further action by or order of the
Bankruptcy Court, and shall be of no further force and effect,
whether surrendered for cancellation or otherwise.
ARTICLE VII TREATMENT OF CLAIMS AND INTERESTS FOR SEARS HOLDINGS
CORP:
General Unsecured Claims (Class 4) are impaired. Each such holder
thereof shall receive its Pro Rata share of (i) the General
Unsecured Liquidating Trust Interests and (ii) the Specified
Unsecured Liquidating Trust Interests.
ESL Unsecured Claims (Class 5) are impaired. Each such holder
thereof shall receive its Pro Rata share of the General Unsecured
Liquidating Trust Interests.
PBGC Claims (Class 3) are impaired. PBGC shall receive from the
Liquidating Trust, (i) the PBGC Liquidating Trust Priority Interest
and (ii) in respect of the Allowed PBGC Unsecured Claims, PBGC's
Pro Rata share of (x) the General Unsecured Liquidating Trust
Interests and (y) the Specified Unsecured Liquidating Trust
Interests, in full and final satisfaction, settlement, release, and
discharge of all PBGC Claims against Sears Holdings Corp.
Intercompany Claims (Class 6) are impaired. On the Effective Date,
pursuant to the Plan Settlement as provided in Section 9.2 of this
Plan, except as provided in Section 9.2(e), no separate
distributions shall be made under the Plan on account of
Intercompany Claims, and such Claims shall be extinguished by
distribution, contribution, or otherwise, in the discretion of the
Debtors.
Intercompany Interests (Class 7) are impaired. On or after the
Effective Date, all Intercompany Interests shall be cancelled. Each
such holder thereof shall neither receive nor retain any property
of the Estate or direct interest in property of the Estate of the
Debtors on account of such Intercompany Interest.
Subordinated Securities Claims (Class 8) are impaired. Holders of
Subordinated Securities Claims shall not receive or retain any
property under the Plan on account of such Subordinated Securities
Claims.
Existing SHC Equity Interests (Class 9) are impaired. On the
Effective Date, all Existing SHC Equity Interests shall be
cancelled.
ARTICLE VIII TREATMENT OF CLAIMS AND INTERESTS FOR ALL OTHER
DEBTORS:
General Unsecured Claims (Class 4) are impaired. Each such holder
thereof shall receive its Pro Rata share of (i) the General
Unsecured Liquidating Trust Interests and (ii) the Specified
Unsecured Liquidating Trust Interests.
ESL Unsecured Claims (Class 5) are impaired. each such holder
thereof shall receive its Pro Rata share of the General Unsecured
Liquidating Trust Interests.
PBGC Claims (Class 3) are impaired. PBGC shall receive from the
Liquidating Trust, (i) the PBGC Liquidating Trust Priority Interest
and (ii) in respect of the Allowed PBGC Unsecured Claims, PBGC's
Pro Rata share of (x) the General Unsecured Liquidating Trust
Interests and (y) the Specified Unsecured Liquidating Trust
Interests, in full and final satisfaction, settlement, release, and
discharge of all PBGC Claims against any Debtor (other than Kmart
Corp., Kmart Stores of Illinois LLC, Kmart of Washington LLC, and
Sears Holdings Corp.) for which the Plan is confirmed.
Intercompany Claims (Class 6) are impaired. On the Effective Date,
pursuant to the Plan Settlement as provided in Section 9.2 of this
Plan, except as provided in Section 9.2(e), no separate
distributions shall be made under the Plan on account of
Intercompany Claims, and such Claims shall be extinguished by
distribution, contribution, or otherwise, in the discretion of the
Debtors.
Intercompany Interests (Class 7) are impaired. On or after the
Effective Date, all Intercompany Interests shall be cancelled.
Subordinated Securities Claims (Class 8) are impaired. Holders of
Subordinated Securities Claims shall not receive or retain any
property under the Plan on account of such Subordinated Securities
Claims.
The Debtors and Liquidating Trust shall fund Distributions and
satisfy applicable Allowed Claims under the Plan using: (a) Cash on
hand; (b) Cash from Net Proceeds of Total Assets (subject to the
limitations set forth in the Plan); (c) Cash from the Wind Down
Account (subject to the limitations set forth in the DIP Order and
the Plan); provided, that the Cash proceeds of the Wind Down
Account shall first be used to pay Administrative Expense Claims;
provided, further, that any funds remaining in the Wind Down
Account at the Effective Date shall be distributed by the
Liquidating Trustee as General Assets in accordance with the Plan
and the Liquidating Trust Agreement; and (d) Cash from the Carve
Out Account; provided, that the Cash proceeds of the Carve Out
Account shall first be used to pay Fee Claims; provided, further,
that any funds remaining in the Carve Out Account after the payment
in full of Allowed Fee Claims shall be distributed by the
Liquidating Trustee as General Assets in accordance with the Plan
and the Liquidating Trust Agreement.
A full-text copy of the modified second amended plan dated
September 13, 2019, is available at https://tinyurl.com/y55oqwer
from PacerMonitor.com at no charge.
Attorneys for the Debtors are Ray C. Schrock, Esq., Jacqueline
Marcus, Esq., Garrett A. Fail, Esq., and Sunny Singh, Esq., at
Weil, Gotshal & Manges LLP, in New York.
About Sears Holdings
Sears Holdings Corporation (OTCMKTS: SHLDQ) --
http://www.searsholdings.com/-- began as a mail ordering catalog
company in 1887 and became the world's largest retailer in the
1960s. At its peak, Sears was present in almost every big mall
across the U.S., and sold everything from toys and auto parts to
mail-order homes. Sears claims to be is a market leader in the
appliance, tool, lawn and garden, fitness equipment, and automotive
repair and maintenance retail sectors.
Sears and Kmart merged to form Sears Holdings in 2005 when they had
3,500 US stores between them. Kmart emerged in 2005 from its own
bankruptcy.
Unable to keep up with online stores and other brick-and-mortar
retailers, a long series of store closings has left it with 687
retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin
Islands as of mid-October 2018. The Company employs 68,000
individuals, of whom 32,000 are full-time employees.
As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total
assets, $11.33 billion in total liabilities and a total deficit of
$4.40 billion.
Unable to cover a $134 million debt payment due Oct. 15, 2018,
Sears Holdings Corporation and 49 subsidiaries sought Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15,
2018.
The Hon. Robert D. Drain is the case judge.
The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel;
M-III Partners as restructuring advisor; Lazard Freres & Co. LLC as
investment banker; DLA Piper LLP as real estate advisor; and Prime
Clerk as claims and noticing agent.
The U.S. Trustee for Region 2 appointed nine creditors, including
the Pension Benefit Guaranty Corp., and landlord Simon Property
Group, L.P., to serve on the official committee of unsecured
creditors. The committee tapped Akin Gump Strauss Hauer & Feld LLP
as legal counsel; FTI Consulting as financial advisor; and Houlihan
Lokey Capital, Inc. as investment banker.
The U.S. Trustee for Region 2 on July 9, 2019, appointed five
retirees to serve on the committee representing retirees with life
insurance benefits in the Chapter 11 cases.
* * *
In February 2019, Bankruptcy Judge Robert Drain has granted Sears
Holdings approval to sell the business to majority shareholder and
CEO Eddie Lampert for approximately $5.2 billion. Lampert's ESL
Investments, Inc., has won an auction to acquire substantially all
of Sears' assets, including the "Go Forward Stores" on a
going-concern basis. The proposal will allow 425 stores to remain
open and provide ongoing employment to 45,000 employees.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
PETROLEUM CO: T&T Chamber Seeks Full Transparency on Refinery Sale
------------------------------------------------------------------
Anthony Wilson at Trinidad Express reports that the Trinidad and
Tobago Chamber of Industry and Commerce (T&T Chamber) is calling on
the Government to ensure there is full transparency with regard to
the sale of the Pointe-a-Pierre refinery, formerly ran by
state-owned Petroleum Co. of Trinidad & Tobago (Petrotrin) to a
company that is wholly owned by the Oilfields Workers' Trade Union
(OWTU). The company is called Patriotic Energies and Technologies
Company Ltd (PETCL), according to Trinidad Express.
In a news release, the T&T Chamber described the transaction as
being of national importance and said it looks forward receiving
further details on "some initial perplexing points, the report
notes.
The Pointe-a-Pierre refinery was formerly run by state-owned oil
company Petroleum Co. of Trinidad & Tobago (Petrotrin).
As previously reported by The Troubled Company Reporter - Latin
America, Patriotic Energies offered upfront cash consideration of
US$700 million for the Refinery.
About Petrotrin
State-owned Petroleum Co. of Trinidad & Tobago (Petrotrin) closed
it oil refinery in November 2018. Prior to closure, Petrotrin
underwent a corporate reorganization that started in the last
quarter of 2018. The T&T government insisted that the
reorganization was necessary to improve the company's efficiency.
As a result of the reorganization, Petrorin's refining business was
shut down and new entities were created: three operating
subsidiaries (Heritage Petroleum Company Limited, Paria Fuel
Trading Company and Guaracara Refining Company Limited), and the
new holding company, TPH, to which the international bonds were
transferred from Petrotrin.
===============
X X X X X X X X
===============
[*] BOND PRICING: For the Week September 23 to September 27, 2019
-----------------------------------------------------------------
Issuer Name Cpn Price Maturity Country Curr
----------- --- ----- -------- ------- ---
Argentine Republic Gov 4.3 70.0 12/31/2033 AR JPY
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
Cia Latinoamericana de 9.5 74.3 7/20/2023 AR USD
Enel Americas SA 5.8 32.7 6/15/2022 CL CLP
Empresa Provincial de 12.5 0.0 1/29/2020 AR USD
Cia Energetica de Pern 6.2 1.1 1/15/2022 BR BRL
Provincia de Buenos Ai 7.9 75.3 6/15/2027 AR USD
AES Tiete Energia SA 6.8 1.2 4/15/2024 BR BRL
MIE Holdings Corp 7.5 56.4 4/25/2019 HK USD
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Provincia de Rio Negro 7.8 70.3 12/7/2025 AR USD
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Province of Santa Fe 6.9 75.2 11/1/2027 AR USD
Odebrecht Finance Ltd 7.0 16.5 4/21/2020 KY USD
Province of Santa Fe 6.9 74.7 11/1/2027 AR USD
Embotelladora Andina S 3.5 37.9 8/16/2020 CL CLP
USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD
Argentine Republic Gov 8.3 72.9 12/31/2033 AR USD
MIE Holdings Corp 7.5 56.2 4/25/2019 HK USD
China Huiyuan Juice Gr 6.5 46.6 8/16/2020 CN USD
Odebrecht Finance Ltd 7.0 17.0 4/21/2020 KY USD
Yida China Holdings Lt 7.0 74.3 4/19/2020 CN USD
Noble Holding Internat 6.1 62.0 3/1/2041 KY USD
USJ Acucar e Alcool SA 9.9 74.0 11/9/2019 BR USD
KrisEnergy Ltd 4.0 40.4 6/9/2022 SG SGD
Noble Holding Internat 5.3 60.5 3/15/2042 KY USD
Noble Holding Internat 6.2 62.2 8/1/2040 KY USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Banco Macro SA 17.5 65.2 5/8/2022 AR ARS
Odebrecht Finance Ltd 6.0 16.4 4/5/2023 KY USD
Cia Latinoamericana de 9.5 73.9 7/20/2023 AR USD
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
YPF SA 16.5 67.3 5/9/2022 AR ARS
Provincia del Chubut A 4.5 2208 3/30/2021 AR USD
Avadel Finance Cayman 4.5 55.0 2/1/2023 US USD
Argentine Republic Gov 6.9 75.2 1/11/2048 AR USD
Polarcus Ltd 5.6 71.8 7/1/2022 AE USD
Argentine Republic Gov 8.3 74.5 12/31/2033 AR USD
Provincia de Rio Negro 7.8 70.4 12/7/2025 AR USD
Argentine Republic Gov 0.5 27.6 12/31/2038 AR JPY
Plaza SA 3.5 38.3 8/15/2020 CL CLP
Banco Security SA 3.0 5.6 7/1/2019 CL CLP
Argentina Bonar Bonds 5.8 75.2 4/18/2025 AR USD
Corp Universidad de Co 5.9 64.2 11/10/2021 CL CLP
City of Cordoba Argent 7.9 73.1 9/29/2024 AR USD
Automotores Gildemeist 8.3 54.2 5/24/2021 CL USD
Provincia de Cordoba 7.1 72.7 8/1/2027 AR USD
Argentine Republic Gov 6.3 74.1 11/9/2047 AR EUR
Provincia del Chaco Ar 4.0 0.0 12/4/2026 AR USD
Fospar S/A 6.5 1.2 5/15/2026 BR BRL
Empresa de Transporte 4.3 30.9 7/15/2020 CL CLP
Argentina Bonar Bonds 7.6 74.4 4/18/2037 AR USD
Automotores Gildemeist 6.8 54.9 1/15/2023 CL USD
SACI Falabella 2.3 50.6 7/15/2020 CL CLP
Sylph Ltd 2.4 65.1 9/25/2036 KY USD
Banco Security SA 3.0 27.4 6/1/2021 CL CLP
Empresa Electrica de l 2.5 63.8 5/15/2021 CL CLP
Sociedad Austral de El 3.0 17.0 9/20/2019 CL CLP
Provincia del Chaco Ar 9.4 74.8 8/18/2024 AR USD
Argentine Republic Gov 7.1 75.7 6/28/2117 AR USD
Provincia de Cordoba 7.1 74.7 8/1/2027 AR USD
Metrogas SA/Chile 6.0 41.6 8/1/2024 CL CLP
Esval SA 3.5 49.9 2/15/2026 CL CLP
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2019. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Latin America subscription rate is US$775 per half-year,
delivered via e-mail. Additional e-mail subscriptions for members
of the same firm for the term of the initial subscription or
balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000.
.
* * * End of Transmission * * *