Bankruptcy Debrief for the Week of Oct. 15th


Sears Finally Lands in Chapter 11, Sees Putting Profitable Stores on Sale

One of the best-known names in retail, Sears, filed for chapter 11, a move that many felt was inevitable for years. Sears, which also includes Kmart, entered chapter 11 with no restructuring deal in place with creditors and no specific trajectory of the case with any potential buyers. It is not common that retailers go in without any specify identified path, but perhaps after the deterioration of Toys “R” Us, Sears is proceeding with caution.

While there is no specific plan, Sears has indicated that about 400 of its 687 stores turn a profit and a sale of those stores could yield the best result for creditors. In regards to the unprofitable stores, Sears is planning to close over 200, with ongoing evaluation of the others.

At the time of the filing, the company’s complex of funded debt comprised over 15 different credit facilities and notes, totaling just over $5 billion. The case will be funded by a $1.8 billion debtor-in-possession loan by secured lenders, only $300 million of which is new money. The remaining is a roll-up of prepetition debt.

Read CFO Robert Riecker’s declaration in support of the first day motions here.

View the Chapter 11 petition here.


Mission Coal Marks Second Coal Company in Bankruptcy Court in Two Weeks

The coal industry took another blow with Mission Coal’s chapter 11 filing, the fifth coal company to file in the last three years, including Westmoreland just last week. Mission Coal operates two mines in West Virginia and one in Alabama with a total funded debt of about $175 million. Unsurprisingly, Mission Coal cites the major factor leading the company to chapter 11 as the low-priced natural gas.

Mission Coal was founded only in January of this year, birthing from the reorganization that combined Seneca Coal Resources and Seminole Coal Resources. In the short and unsuccessful time since formation, Mission Coal invested $28 million to upgrade the mining complexes in an attempt to reach target production of 6.5 million short tons of coal but ended up revising that number to 4.5 million short tons.

As of the filing, the cited $175 million of funded debt was broken down into about $104 million of first-lien secured debt and $71 million of second-lien secured debt. Additionally, Mission Coal estimates roughly $61.1 million of retirement medical obligations, $18.2 million in black lung benefit obligations and over $30 million of asset retirement obligations.

Read Chief Restructuring Officer Kevin Nystrom’s declaration in support of the first-day motions here.

View the Chapter 11 petition here.


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