Sears, Transform Holdco purchase agreement dispute settlement OK’d

By Caroline Salls

Pittsburgh, Jan. 28 – Sears Holdings Corp. received court approval of a settlement reached with asset purchaser Transform Holdco LLC that resolves outstanding disputes related to the asset purchase agreement, according to an order filed Tuesday with the U.S. Bankruptcy Court for the Southern District of New York.

Sears said the settlement allows for “an immediate influx of substantial funds to the debtors’ estates for the benefit of the estates’ creditors” and eliminates the burdens, expenses and risks associated with protracted litigation, including appeals.

According to the motion, the settlement calls for an $18.3 million payment to the Sears debtors’ estates from Transform Holdco. This includes a $13 million cash payment and the transfer of $5.3 million of utility deposits.

The settlement also incorporates and ratifies all interim settlements of various APA-related disputes and all payments and transfers made as a result of the court’s previous rulings and interim settlements, the motion said.

In addition, Sears said the parties “will walk away from any further litigation associated with outstanding APA-related disputes.”

As a result, the company said Transform will not be required to satisfy any further 503(b)(9) accounts payable, other than cure costs, or severance reimbursement obligations under the purchase agreement.

The Sears debtors will keep more than $45 million in previously transferred funds and will now recover an additional $18.3 million under the settlement.

The company said the debtors will also retain the benefit of Transform’s payment of almost $160 million in liabilities assumed under the purchase agreement, and that payment will be final and no longer subject to offset or appeal.

Sears is a retailer based in Hoffman Estates, Ill. The company filed bankruptcy on Oct. 15, 2018 under Chapter 11 case number 18-23538.

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