As previously disclosed, on October 15, 2018, Sears Holdings Corporation (the Company) and certain of its subsidiaries (together with the
Company, the Debtors) filed voluntary petitions under Chapter 11 of Title 11 of the United States Code (the Chapter 11 Cases) in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy
Court). The Chapter 11 Cases are being jointly administered under the caption In re Sears Holdings Corporation, et al., Case
Documents filed on the docket of and other
information related to the Chapter 11 Cases are available free of charge online at https://restructuring.primeclerk.com/sears. Documents and other information available on such website are not part of this document and shall not be deemed
incorporated by reference in this document.
In connection with the Chapter 11 Cases, on January 29, 2019, the Companys Board of Directors
approved the termination of the Sears Holdings Pension Plan 1 and Sears Holdings Pension Plan 2 (together, the Plans), effective March 31, 2019, in a distress termination of the Plans under Section 4041(c) of the
Employee Retirement Income Securities Act of 1974, as amended (ERISA). Accordingly, on January 29, 2019, the Company and its subsidiaries filed notices of intent to terminate the Plans in a distress termination with the U.S. Pension
Benefit Guaranty Corporation, a federal agency which insures certain pension plans (the PBGC). If the distress termination is approved by the PBGC, the PBGC would assume sponsorship of the Plans, and all plan assets and liabilities would
be transferred to the PBGC. The PBGC would assume responsibility to pay all future plan benefits, up to ERISA guaranteed limits, which are estimated to cover approximately 99% of all such benefits without reduction.
The PBGC has separately issued a notice of determination for an involuntary termination of the Plans under Section 4042 ERISA, effective as
of January 31, 2019. On February 1, 2019, the PBGC filed an action in the United States District Court for the Northern District of Illinois (Case No.
seeking an order of the court to enforce its determination for such involuntary termination. The Company opposes the PBGCs effort to enforce its
determination to involuntarily terminate the Plans, and intends to continue discussions with the PBGC regarding the appropriate basis for termination of the Plans under ERISA and the effective date of such termination, as well as the treatment and
amount of the PBGCs claims in the Chapter 11 Cases.
This Current Report on Form
may include forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this filing that address activities, events or developments that the Company expects, believes, targets or anticipates will or may occur
in the future are forward-looking statements. The Companys actual results may differ materially from those anticipated in these forward-looking statements as a result of certain risks and other factors, which could include the following: the
enforcement of an involuntary termination of the Pension Plans; the failure to obtain approval of that certain Asset Purchase Agreement entered into by the Company and certain of its subsidiaries with Transform Holdco LLC (the Buyer), an
affiliate of ESL Investments, Inc., as of January 17, 2019 (the Purchase Agreement) by the Bankruptcy Court or, if the Purchase Agreement is approved by the Bankruptcy Court, to consummate the transaction therefrom pursuant to which
the Buyer agreed to acquire substantially all of the
retail footprint and other assets and component businesses of the Company as a going concern, risks and uncertainties relating to the Chapter 11
Cases, including but not limited to, the Companys ability to obtain Bankruptcy Court approval with respect to motions in the Chapter 11 Cases, the effects of the Chapter 11 Cases on the Company and on the interests of various constituents,
Bankruptcy Court rulings in the Chapter 11 Cases and the outcome of the Chapter 11 Cases in general, the length of time the Company will operate under the Chapter 11 Cases, risks associated with third-party motions in the Chapter 11 Cases, the
potential adverse effects of the Chapter 11 Cases on the Companys liquidity or results of operations and increased legal and other professional costs necessary to execute the Companys reorganization; the conditions to which the
financing is subject and the risk that these conditions may not be satisfied for various reasons, including for reasons outside of
the Companys control; the impact of and ability to successfully implement store closures; the Companys ability to consummate sales of assets and the terms and conditions of any such sales, including the Go Forward Stores; the
Companys ability to implement operational improvement efficiencies; uncertainty associated with evaluating and completing any strategic or financial alternative as well as the Companys ability to implement and realize any anticipated
benefits associated with any alternative that may be pursued, including the asset sales and wind down of operations; the consequences of the acceleration of our debt obligations; trading price and volatility of the Companys common stock and
the risks related to the Companys delisting from Nasdaq and trading on the OTC Pink Market; as well as other risk factors set forth in the Companys Annual Report on Form
and Quarterly Reports
filed with the Securities and Exchange Commission. The Company therefore cautions readers against relying on these forward-looking statements. All forward-looking statements attributable to the
Company or persons acting on the Companys behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and, except as required by law, the Company undertakes no
obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.