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T R O U B L E D C O M P A N Y R E P O R T E R
Saturday, March 16, 2019, Vol. 23, No. 74
Headlines
PG&E CORP: DIP Lenders Given Broad Protections,Tort Panel Complains
SEARS HOLDINGS: Reports $500 Million Net Loss at Feb. 2
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PG&E CORP: DIP Lenders Given Broad Protections,Tort Panel Complains
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BankruptcyData.com reported that the Official Committee of Tort
Claimants objected to PG&E Corp, et al.'s proposed
debtor-in-possession ("DIP") financing motion.
In their objection, the Tort Claimants Panel stated, "The Debtors
and the DIP Lenders propose financing terms that may constitute
'market' terms on Wall Street or in a standard business bankruptcy
case, but the terms are by no means justifiable in this case given
the essential public service the Debtors provide to millions of
Californians. It is not acceptable for the DIP Lenders to reserve
for themselves the unilateral right to foreclose on utility assets,
nor control the timing or terms of the plan of reorganization. DIP
Lenders should not be able to procure a seat at the table in these
Cases in any meaningful respect where the collateral for the
proposed DIP Loans is worth many times the amount of the loans and
the DIP Lenders have no meaningful risk of nonpayment."
"The protections granted to the DIP Lenders under the proposed
order bear no relationship to the actual risk to the DIP Lenders of
nonpayment in these Cases. Eight of nine DIP Lenders also hold
prepetition unsecured claims against both the utility and the
holding company. Any control over the Debtors' plan process or
their assets through the provisions of the DIP Loans will give
these unsecured creditors an unfair advantage in negotiations over
other claimants holding claims of the same priority," the Tort
Claimants Panel continued.
The Tort Claimants Panel asserted that approval of the DIP
Finanving Motion should be conditioned on the following terms:
-- Eliminate the automatic stay relief upon the Court finding
that a "Termination Event" has occurred.
-- Limit any stay relief that is granted by the Court to
enforcement of liens on the Debtors' assets that do not
constitute "utility assets," and allow further relief only
upon a showing by the DIP Lenders that amounts remain owing
after all non-utility asset collateral has been liquidated.
-- Condition the borrowing on the Debtors' agreement to use a
small portion of the proceeds to (1) fund a program for
housing, food and other necessities for Camp fire victims who
are still living in tents or trailers or sleeping on friends'
couches, and (2) pay the roughly $15 to 20 million in signed
settlements with Butte County victims that the Debtors
refused to pay shortly before filing the Cases.
About PG&E Corp.
PG&E Corporation (NYSE: PCG) -- http://www.pgecorp.com/-- is a
Fortune 200 energy-based holding company, headquartered in San
Francisco. It is the parent company of Pacific Gas and Electric
Company, an energy company that serves 16 million Californians
across a 70,000-square-mile service area in Northern and Central
California.
As of Sept. 30, 2018, the Debtors, on a consolidated basis, had
reported $71.4 billion in assets on a book value basis and $51.7
billion in liabilities on a book value basis.
PG&E Corp. and Pacific Gas employ approximately 24,000 regular
employees, approximately 20 of whom are employed by PG&E Corp. Of
Pacific Gas' regular employees, approximately 15,000 are covered by
collective bargaining agreements with local chapters of three labor
unions: (i) the International Brotherhood of Electrical Workers;
(ii) the Engineers and Scientists of California; and (iii) the
Service Employees International Union.
On Jan. 29, 2019, PG&E Corp. and its primary operating subsidiary,
Pacific Gas and Electric Company, filed voluntary Chapter 11
petitions (Bankr. N.D. Cal. Lead Case No. 19-30088).
PG&E Corporation and its regulated utility subsidiary, Pacific Gas
and Electric Company, said they are facing extraordinary challenges
relating to a series of catastrophic wildfires that occurred in
Northern California in 2017 and 2018. The utility said it faces an
estimated $30 billion in potential liability damages from
California's deadliest wildfires of 2017 and 2018.
Weil, Gotshal & Manges LLP and Cravath, Swaine & Moore LLP are
serving as PG&E's legal counsel, Lazard is serving as its
investment banker and AlixPartners, LLP is serving as the
restructuring advisor to PG&E. Prime Clerk LLC is the claims and
noticing agent.
In order to help support the Company through the reorganization
process, PG&E has appointed James A. Mesterharm, a managing
director at AlixPartners, LLP, and an authorized representative of
AP Services, LLC, to serve as Chief Restructuring Officer. In
addition, PG&E appointed John Boken also a Managing Director at
AlixPartners and an authorized representative of APS, to serve as
Deputy Chief Restructuring Officer. Mr. Mesterharm, Mr. Boken and
their colleagues at AlixPartners will continue to assist PG&E with
the reorganization process and related activities.
SEARS HOLDINGS: Reports $500 Million Net Loss at Feb. 2
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Sears Holdings Corporation, et al., filed with the U.S. Securities
and Exchange Commission their monthly operating report for January
6, 2019 through February 2, 2019.
The Debtors' consolidated statement of operations reflected a net
loss of $500 million on $577 million of total revenues for the
period.
As of February 2, 2019, the Debtors listed $31.37 billion in
consolidated total assets, $39.06 billion in consolidated total
liabilities, and a $7.69 billion in consolidated total
shareholders' deficit.
The Debtors listed total cash receipts of $945.61 million and total
cash disbursements of $793.69 million.
A copy of the monthly operating report is available at the SEC at:
https://is.gd/F2QTRg
About Sears Holdings
Sears Holdings Corporation (NASDAQ: SHLD) --
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.
Weil, Gotshal & Manges LLP is serving as legal counsel and M-III
Partners is serving as restructuring advisor. Aebersold, Managing
Director, and Levi Quaintance, Vice President of Lazard Freres &
Co. LLC serve as investment banker to Holdings. DLA Piper LLP is
the real estate advisor. Prime Clerk is the 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 an official committee of unsecured
creditors. Akin Gump Strauss Hauer & Feld LLP is counsel to the
creditors' committee. FTI Consulting is financial advisor to the
creditors' committee. Houlihan Lokey Capital, Inc., is providing
investment banking services to the committee.
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Troubled Company Reporter is a daily newsletter co-published
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