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Holders of ESL Unsecured Claims (other than at Kmart Corp.) will receive their pro rata share of certain
Liquidating Trust Interests and will be satisfied from Net Proceeds of General Assets and proceeds from the Wind Down Account (after payment in full of all senior Claims and the PBGC Liquidating Trust Priority Interest).
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Holders of ESL Unsecured Claims at Kmart Corp. will receive their pro rata share of certain enhanced Liquidating
Trust Interests (as compared to ESL Unsecured Claims at all other Debtors) and will be satisfied from Net Proceeds of General Assets, proceeds from the Wind Down Account (after payment in full of all Administrative Expense Claims, Priority Non-Tax Claims, Priority Tax Claims, Other 507(b) Priority Claims, Secured Claims, and the PBGC Liquidating Trust Priority Interest), and Excess PBGC Amounts.
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On the Effective Date, all Liquidating Trust Assets of the Debtors will be transferred to the Liquidating Trust in accordance with the Plan and all Debtors
shall be dissolved without the necessity for any other or further actions to be taken by or on behalf of such dissolving Debtor or its stockholder(s) or any payments to be made in connection therewith, other than the filing of a certificate of
dissolution with the appropriate governmental authorities. All directors and officers of the dissolved Debtors shall be deemed to have resigned in their capacity as of the Effective Date.
Settlements, Administrative Expense Claims Consent Program, Releases, and Exculpations
Below is a summary of the key terms of various settlements incorporated in the Plan:
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PBGC Settlement: The PBGC Settlement provides for settlement of PBGCs Claims, the consensual
termination of the Pension Plans, PBGCs support of the Plan, mutual releases, and the PBGCs agreement to take all reasonable actions to ensure that any claim of KCD against the Debtors is waived in full.
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Plan Settlement: The Plan Settlement resolves inter-estate and inter-creditor issues in relation to
Intercompany Claims, and provides for the settlement of substantive consolidation. All of the Debtors Assets will be consolidated and treated as Liquidating Trust Assets, and holders of certain claims that may be adversely impacted by the
consolidation will receive an appropriate Plan Settlement Premium.
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Creditors Committee Settlement: The Creditors Committee Settlement provides for the settlement
of post-Effective Date corporate governance and the selection process for the Liquidating Trustee and the Primary Trust Liquidation Counsel.
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Pursuant to the Administrative Expense Claims Consent Program, each holder of an Administrative Expense Claim who affirmatively opts in to the Program will be
entitled to a pro rata share of an initial cash distribution of $21 million on or about December 1, 2019, and will receive 75% of their Allowed Administrative Expense Claim amount in full and final satisfaction of such Claim. Further, each
holder of an Administrative Expense Claim who does not affirmatively opt in to or timely opt out of such Program will be entitled an accelerated distribution (subject to certain reserves necessary to continue to administer the Estates and pursue
affirmative Estate litigation), and will receive 80% of their Allowed Administrative Expense Claim amount in full and final satisfaction of such Claim. Holders of an Administrative Expense Claim that affirmatively opt out of the Administrative
Expense Claims Consent Program retain the right to receive payment of the Allowed 100% of such Claim, but payment of such Claim shall not occur earlier than the Effective Date and holders of opt-out Claims
will not participate in any distribution until the Plan has become effective or the Settled Administrative Expense Claims have been satisfied in full in accordance with the Administrative Expense Claims Consent Program.
The Plan also provides releases and exculpations for the benefit of the Debtors, the Creditors Committee, and other parties related thereto, each in
their capacity as such, from various claims and causes of action, as further set forth in Article XV of the Plan.
Treatment of the Companys
Common Stock and Warrants to Purchase Common Stock under the Plan
Pursuant to the Plan, the Companys common stock and warrants to purchase
shares of common stock outstanding immediately before the Effective Date will be cancelled and of no further force or effect after the Effective Date. As of October 16, 2019, the Company had (i) 107,908,943 shares of common stock outstanding
and (ii) 21,993,338 warrants to purchase shares of common stock outstanding, which warrants shall expire on December 15, 2019 (assuming the Effective Date has not yet occurred).
Certain Information Regarding Assets and Liabilities of the Company
Information as to the assets and liabilities of the Debtors as of the most recent practicable date was included in the Monthly Operating Report for the period
from August 4, 2019 to August 31, 2019 (discussed further below, the August Monthly Operating Report), which was not prepared for the purpose of providing the basis for an investment decision relating to any of the securities
of the Company or any of its subsidiaries. The August Monthly Operating Report is limited in scope, covers a limited time period and has been prepared solely for the purpose of complying with the monthly reporting requirements of the Bankruptcy
Court. The August Monthly Operating Report was not audited or reviewed by independent accountants, was not prepared in accordance with generally accepted accounting principles in the United States, is in a format prescribed by applicable bankruptcy
laws or rules, and is subject to future adjustment and reconciliation. There can be no assurance that, from the perspective of an investor or potential investor in the Companys securities, the August Monthly Operating Report is complete.
Results set forth in the August Monthly Operating Report should not be viewed as indicative of future results.