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January 3, 2019 – The Court hearing the Sears Holdings case issued an order rejecting the request of bidder and creditor Omega Advisors Inc. (“Omega”) to overturn the sale and lockup of $650mn in medium term inter-company notes (the “MTNs”) issued by Sears Roebuck Acceptance Corp. (SRAC) to Cyrus Capital Partners L.P. (“Cyrus”) [Docket No. 1481]. The sale of the MTNs to Cyrus occurred on November 20, 2018 and the Debtors reported that Cyrus’s bid of “$82,500,000 and other valuable consideration was the highest and best offer.” The Court’s order noted that no further objections as to the sale had been received.
As previously reported in respect of the Omega motion [Docket No. 1077], “Omega asks the Court to invalidate (i) the sale to Cyrus Capital Partners L.P. (‘Cyrus’) of approximately $650 million in medium-term notes (‘MTNs’) issued by Sears Roebuck Acceptance Corp. (‘SRAC’) not offered or noticed for sale to any other bidder and (ii) the clandestine agreement between the Debtors and Cyrus not to sell an additional $1.4 billion in MTNs held by non-Debtor affiliate Sears Reinsurance Company Ltd. (‘Sears Re’). The auction was not a fair, transparent, and competitive bidding process, as required by the order authorizing it, dated November 19, 2018 (the ‘Sale Order’), and because the bidders (aside from Cyrus) had no notice of what was actually being sold….Pursuant to the Sale Order, Debtors issued an auction notice (the ‘Auction Notice’) stating that they would ‘conduct an auction on no more than $251,245,000 SRAC Medium Term Notes’ (the ‘Listed MTNs’) out of the nearly $900 million of MTNs that they held. By limiting the Auction to approximately $250 million of MTNs, interested bidders understood that the Debtors specifically reserved approximately $650 million of MTNs that they held (the ‘Unlisted MTNs’) from the Auction.”
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