Sear’s Bankruptcy, Who Gets the Real Estate, and How the Pension Fund Got Hung Out to Dry (at Taxpayer Expense) Invade Mnuchin’s Senate Confirmation Hearing

‘You were a Director at Sears for 12 years where you had oversight over the administration and investment in the pension fund.’ That Sears Holdings will file for bankruptcy appeared to be taken for granted in the confirmation hearings before the US Senate on Thursday. And when it does file, it’s going to get very complicated for Steven Mnuchin, the Trump administration’s appointment for Treasury Secretary. But the most fascinating part, for us as a non-political site, is the dissection of the whole Sears deal.
Senator Bob Menendez (D-NJ), as he proceeds with his questioning, lays out how Sears Holding’s CEO ‘Eddie’ Lampert, his hedge fund ESL, and some other entities have worked hard to get their hands on the real estate when Sears Holdings goes through bankruptcy, while the pension fund left behind is a sinkhole that taxpayers might be shanghaied into filling.
I have postulated at the end of December that Sears Holdings will try to stay out of bankruptcy at least through July to avoid triggering fraudulent conveyance issues in the bankruptcy code. But after that, all bets are off. So all this might transpire pretty soon.

This post was published at Wolf Street on Jan 20, 2017.