Sears 2009 Annual Report Download - page 84

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
Claims Resolution
During the third quarter of 2008, we completed the settlement of substantially all of the claims associated
with the discharge of the Predecessor Company’s liabilities subject to compromise pursuant to the Plan of
Reorganization. Accordingly, the remaining 2.1 million of the 31.9 million shares set aside for distribution have
been (or are in the process of being) distributed to holders of Class 5 claims. The actual amount of allowed Class
5 claims was approximately $4 billion, which is less than the $4.3 billion estimate provided for in the Plan of
Reorganization.
Bankruptcy-Related Settlements
In fiscal 2008 and 2007, we recognized recoveries of $5 million, and $18 million, respectively, from
vendors who had received cash payments for pre-petition obligations (“critical vendor claims”) or preference
payments. During fiscal 2008, the Company received 126,385 shares of common stock (weighted average price
of $94.61 per share) with an approximate value of $12 million from the Class 5 distribution referenced above. Of
this amount, $5 million was recognized as a recovery gain in other income, as they relate to recoveries from
vendors who had received cash payments for pre-petition obligations (critical vendor claims) or preference
payments. The remaining $7 million was recorded as capital in excess of par value, as these shares are the result
of a fiscal 2004 transaction in which the Company entered into settlement agreements with past providers of
surety bonds to resolve all issues in connection with their pre-petition claims. In accordance with the terms of the
settlement agreements, Kmart assumed responsibility for the future obligations under the bonds issued with
respect to the Predecessor Company’s workers’ compensation insurance program and was assigned the Class 5
claims against the Company.
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